Perspectives in economic analysis and inquiry

Economics - Macroeconomics

Ch4, #6 - Market Forces Supply and Demand - Suppose that in the year 2005 the number of births is temporarily high. How does this baby boom affect the price of baby sitting services in 2010 and 2020? (Hint: 5-year-olds need babysitters whereas 15-year-olds can be baby sitters. (you can use 2 supply and demand graphs if you need to (one for 2010, one for 2020).

The baby boomer generation is right now going through this very situation in regard to social security situation. There are not enough forecast workers to cover the social security demands of the future. But in regard to this example, as the number of births is high, future babysitting services will indeed be affected. In 2010, there may not be enough baby sitters to care for the increased number of babies turning five, but in 2020 there may be to many babysitters to care for the fewer births of the future, assuming there are fewr births in the future. Thus in 2010 there will be a bigger demand for babysitters and in 2020 there will be less demand and to large a supply.

Ch4, #9 - The market for pizza has the following demand and supply schedules:

Price

Quantity demanded

Quantity Supplied

1. Graph the demand and supply curves

2. What is the equilibrium price and quantity in this market?

The equilibrium price is just under $6

3. If the actual price in this market were above the equilibrium price, what would drive the market toward the equilibrium?

A price increase for pizza will reduce the demand for pizza and would therefore drive the market towards equilibrium.

4. If the actual price in this market were below the equilibrium price, what would drive the market toward the equilibrium?

In the reverse, reduced price would increase demand and thus drive the market toward the equilibrium.

Ch4, #13 - Market research has revealed the following information about the market for chocolate bars:

The demand schedule can be represented by the question Qd = 1600-300P, where Qd is the quantity demanded and P. is the price. The supply schedule can be represented by the equation Qs = 1400-700P, where Qs is the quantity supplied. Calculate the equilibrium price and quantity in the market for chocolate bars.

Ch5, #20 - For each of the following pairs of goods, which good would you expect to have more elastic demand and why?

a. required textbooks of mystery novels

Because the textbooks are required, there will be more elasticity for mystery novels. That is because elasticity is a measure of responsiveness and indicates how much one thing changes if something else that affects it is changed. In other words, the required text book is needed whether the price changes or if the number of students changes.

b. Beethoven recordings or classical music recordings in general

In this case, the elasticity of demand would show that the classical recordings in general would fluctuate as new artists or prices or some other aspect changes. For example, if the price of classical recordings changed, demand may go up. And since the elasticity of demand measures the responsiveness of quantity demanded, Beethoven may have a more loyal listener ship that will purchase his works regardless of industry changes.

c. heating oil during the next six months or heating oil during the next five years