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4. a. Film streaming services and TV screens are likely to be complements because
b. The technological improvement would reduce the cost of producing a TV
Figure 16
c. The reduction in the price of TV screens would lead to an increase in the
48
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise
on a password-protected website or school-approved learning management system for classroom use.
Price of
Film
Streaming
Quantity of
Film
Streaming
S
D1
D2
Chapter 4/The Market Forces of Supply and Demand ❖ 49
Figure 17
Figure 18
5. Technological advances that reduce the cost of producing computer chips
Figure 19
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise
on a password-protected website or school-approved learning management system for classroom use.
Chapter 4/The Market Forces of Supply and Demand ❖ 50
Figure 20
Figure 21
6. a. When a hurricane in South Carolina damages the cotton crop, it raises input
prices for producing sweatshirts. As a result, the supply of sweatshirts shifts to
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise
on a password-protected website or school-approved learning management system for classroom use.
Chapter 4/The Market Forces of Supply and Demand ❖ 51
Figure 22
b. A decline in the price of leather jackets leads more people to buy leather
Figure 23
c. The eects of colleges requiring students to engage in morning exercise in
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise
on a password-protected website or school-approved learning management system for classroom use.
Chapter 4/The Market Forces of Supply and Demand ❖ 52
Figure 24
d. The invention of new knitting machines increases the supply of sweatshirts. As
Figure 25
7. Ketchup is a complement for hot dogs. Therefore, when the price of hot dogs
rises, the quantity demanded of hot dogs falls and this lowers the demand for
ketchup. The end result is that both the equilibrium price and quantity of ketchup
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise
on a password-protected website or school-approved learning management system for classroom use.
Chapter 4/The Market Forces of Supply and Demand ❖ 53
8. a. Quantity supplied equals quantity demanded at a price of $6 and quantity of
81 pizzas (Figure 30).
Figure 30
b. If the price were above $6, quantity supplied would exceed quantity
c. If the price were below $6, quantity demanded would exceed quantity
9. The news of the increased health benets from consuming oranges will increase
10. a. Because Cour is an ingredient in bagels, a decline in the price of Cour would
shift the supply curve for bagels to the right. The result, shown in Figure 31,
Figure 31
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise
on a password-protected website or school-approved learning management system for classroom use.
Chapter 4/The Market Forces of Supply and Demand ❖ 54
Figure 32 Figure 33
What happens if the price of milk falls? Because milk is an ingredient in cream
cheese, the fall in the price of milk leads to an increase in the supply of cream
b. In part (a), we found that a fall in the price of Cour led to a rise in the price of
cream cheese and a rise in the equilibrium quantity of bagels. If the price of
What happens if the price of milk rises? From part (a), we found that a fall in
the price of milk caused a decline in the price of cream cheese, so a rise in the
price of milk would cause a rise in the price of cream cheese. Because bagels
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise
on a password-protected website or school-approved learning management system for classroom use.
Chapter 4/The Market Forces of Supply and Demand ❖ 55
Figure 34 Figure 35
11. a. As Figure 35 shows, the supply curve is vertical. The constant quantity
b. Quantity supplied equals quantity demanded at a price of $8. The equilibrium
c.
Price Quantity Demanded Quantity Supplied
$4 14,000 8,000
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise
on a password-protected website or school-approved learning management system for classroom use.
