Naked Economics Chapter 4

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Answers to Questions in Chapter 2 Note: No. before ( indicates a page number Page 45 ( Assume that there are 200 consumers in the market. Of these, 100 have schedules like Rachael’s and 100 have schedules like David’s. What would be the total market demand schedule for potatoes now? |Price |Total Market Demand | | | | |4 |4400 | |8 |2600 | |12 |1400 | |16 |800 | |20 |600 | | | | 46 ( 1. How much would be demanded at a price of 60c per kilogram?…show more content…
For what reasons might the supply of potatoes fall? Examples include: 1. The cost of producing potatoes rises. 2. The profitability of alternative crops (e.g. carrots) rises. 3. A poor potato harvest 4. Farmers expect the price of potatoes to rise (short-run supply falls). 51 ( 2. For what reasons might the supply of leather rise? Examples include: 5. The costs of producing leather fall. 6. The profitability of producing alternative products decreases. 7. The price of beef rises. 8. A long-running industrial dispute involving leather workers is resolved. 9. Producers expect the price of leather to fall (short-run supply…show more content…
In each case consider whether there is a movement along the supply curve (and in which direction) or a shift in it (and whether left or right). (a) New oil fields start up in production. (b) The demand for electricity rises. (c) The price of gas falls. (d) Oil companies anticipate an upsurge in demand for oil in electricity generation. (e) The demand for petrol rises. (f) New technology decreases the costs of oil refining. (a) Shift right. (b) Movement up along (as a result of a rise in price). (c) Movement down along (as a result of a fall in price resulting from a fall in demand as suppliers switch to coal fired stations). (d) Shift left (if companies want to conserve their stocks in anticipation of a price rise). (e) Shift right (more of a good in joint supply is produced). (f) Shift right. 53 ( Explain the process by which the price of houses would rise if there were a shortage. People with houses to sell would ask a higher price than previous sellers of similar houses (probably with the advice of a real estate agent). Potential purchasers would be prepared to pay a higher price than previously in order to obtain the type of house they
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