Why the Chinese Were Not Interested in Following up The Pacific 1) Compare and contrast the the social and economic origins and accomplishment of the Chine

Why the Chinese Were Not Interested in Following up The Pacific 1) Compare and contrast the the social and economic origins and accomplishment of the Chinese Admiral Zheng He and the Genoese merchant explorer Christopher Columbus.

2) Compare and contrast the Chinese states and societies of the era 1400 to 1600 to those of Europe. Why did China accrue so much power and wealth and the European state system generate instability but also innovation?

resources you will be using to find the answers

https://content.umuc.edu/file/fcc26600-d98b-4d89-9…

https://content.umuc.edu/file/cf3aa015-44ca-4327-8… Assignment No. 1
Course: Microeconomics
(Econ-101)
Academic Year:1440-1441 H
Student name:
Semester: 1st
Student grade: / 30
CRN:
Level of the marks:
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Instructions:
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Use Times New Roman font 12 for all your answers.
Assignment Questions
Consider the market for apple juice. In this market, the supply curve is given by QS = 100PJ
?20PA and the demand curve is given by QD = 1000?150PJ +100PT, where J denotes apple juice,
A denotes apples, and T denotes tea.
1) Assume that PA is fixed at 5 and PT = 4. Calculate the equilibrium price and quantity
in the apple juice market (5 marks);
2) Suppose that a poor harvest season raises the price of apples to PA = 11.25
a) Is it possible to reach a market equilibrium if the price of apple juice P J remains
unchanged? Why? How much quantity of apple juice will finally be exchanged on
the market? (5 marks)
b) Find the market price necessary to restore equilibrium. Deduce the equilibrium
quantity of apple juice (5 marks);
3) Draw a graph to illustrate your answers (5 marks).
Answer:-
CHAPTER 3
Demand, Supply, and
Market Equilibrium
Copyright © 2012 Pearson
Prentice
Hall.
All rights
reserved.
Copyright
© 2012
Pearson
Prentice
Hall. All rights reserved.
3-1
CHAPTER
Demand, Supply, and
Market Equilibrium
3
A powerful earthquake in February 2010 damaged many of
Chile’s wood-pulp mills and the infrastructure to export it.
Chile is responsible for 8 percent of the world’s wood pulp.
PREPARED BY
Brock Williams
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
CHAPTER 3
Demand, Supply, and
Market Equilibrium
APPLYING THE CONCEPTS
1
How do changes in demand affect prices?
Hurricane Katrina and Baton Rouge Housing Prices
2
How do changes in supply in one market affect other markets?
Honey Bees and the Price of Ice Cream
3
How do simultaneous changes in supply and demand affect the
equilibrium price?
The Supply and Demand for Cruise Ship Berths
4
How do changes in supply affect prices?
The Bouncing Price of Vanilla Beans
5
How do producers respond to higher prices?
Drought in Australia and the Price of Rice
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-3
CHAPTER 3
Demand, Supply, and
Market Equilibrium
DEMAND, SUPPLY, AND
MARKET EQUILIBRIUM
?perfectly competitive market
A market with so many buyers and
sellers of a homogeneous product
and no barriers to entry, that no
single buyer or seller can affect the
market price.
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-4
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.1
THE DEMAND CURVE
?quantity demanded
The amount of a product that consumers
are willing and able to buy.
?demand schedule
A table that shows the relationship
between the price of a product and the
quantity demanded, ceteris paribus.
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-5
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.1
THE DEMAND CURVE (cont’d)
Here is a list of the variables that affect an individual consumer’s
decision, using the pizza market as an example:
• The price of the product (for example, the price of a pizza)
• The consumer’s income
• The price of substitute goods (for example, the prices of tacos or
sandwiches or other goods that can be consumed instead of pizza)
• The price of complementary goods (for example, the price of
lemonade or other goods consumed with pizza)
• The consumer’s preferences or tastes and advertising that may
influence preferences
• The consumer’s expectations about future prices
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-6
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.1
THE DEMAND CURVE (cont’d)
The Individual Demand Curve and the Law of Demand
?individual demand curve
A curve that shows the relationship
between the price of a good and
quantity demanded by an individual
consumer, ceteris paribus.
?law of demand
There is a negative relationship
between price and quantity
demanded, ceteris paribus.
?change in quantity demanded
A change in the quantity consumers
are willing and able to buy when the
price changes; represented
graphically by movement along the
demand curve.
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-7
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.1
THE DEMAND CURVE (cont’d)
The Individual Demand Curve and the Law of Demand
? FIGURE 3.1
The Individual Demand Curve
According to the law of demand, the
higher the price, the smaller the
quantity demanded, everything else
being equal. Therefore, the demand
curve is negatively sloped: When
the price increases from $6 to $8,
the quantity demanded decreases
from seven pizzas per month (point
c) to four pizzas per month (point b).
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-8
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.1
THE DEMAND CURVE (cont’d)
From Individual Demand to Market Demand
? FIGURE 3.2
From Individual to Market
Demand
The market demand equals
the sum of the demands of all
consumers. In this case,
there are only two, so at each
price the market quantity
demanded equals the
quantity demanded by Al plus
the quantity demanded by
Bea.
At a price of $8, Al’s quantity
is four pizzas (point a) and
Bea’s quantity is two pizzas
(point b), so the market
quantity demanded is six
pizzas (point c).
Each consumer obeys the
law of demand, so the market
demand curve is negatively
sloped.
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
?market demand curve
A curve showing the relationship between price and
quantity demanded by all consumers, ceteris paribus.
3-9
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.2
THE SUPPLY CURVE
Suppose you ask the manager of a firm, “How much of your product
are you willing to produce and sell?” The manager’s decision about
how much to produce depends on many variables, including the
following, using pizza as an example:
• The price of the product (for example, the price per pizza)
• The wage paid to workers
• The price of materials (for example, the price of dough and
cheese)
• The cost of capital (for example, the cost of a pizza oven)
• The state of production technology (for example, the knowledge
used in making pizza)
• Producers’ expectations about future prices
• Taxes paid to the government or subsidies (payments from the
government to firms to produce a product)
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-10
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.2
THE SUPPLY CURVE (cont’d)
The Individual Supply Curve and the Law of Supply
?quantity supplied
The amount of a product that firms are
willing and able to sell.
?supply schedule
A table that shows the relationship
between the price of a product and
quantity supplied, ceteris paribus.
?individual supply curve
A curve showing the relationship
between price and quantity supplied by a
single firm, ceteris paribus.
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-11
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.2
THE SUPPLY CURVE (cont’d)
The Individual Supply Curve and the Law of Supply
? FIGURE 3.3
The Individual Supply Curve
The supply curve of an individual
supplier is positively sloped,
reflecting the law of supply.
As shown by point a, the quantity
supplied is zero at a price of $2,
indicating that the minimum
supply price is just above $2.
An increase in price increases the
quantity supplied to 100 pizzas at
a price of $4, to 200 pizzas at a
price of $6, and so on.
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-12
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.2
THE SUPPLY CURVE (cont’d)
The Individual Supply Curve and the Law of Supply
?law of supply
There is a positive relationship between
price and quantity supplied, ceteris
paribus.
?change in quantity supplied
A change in the quantity firms are willing
and able to sell when the price changes;
represented graphically by movement
along the supply curve.
?minimum supply price
The lowest price at which a product will
be supplied.
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-13
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.2
THE SUPPLY CURVE (cont’d)
Why Is the Individual Supply Curve Positively Sloped?
MARGINAL PRINCIPLE
Consistent with the Law of Supply, increase the level of an activity as long as
its marginal benefit exceeds its marginal cost. Choose the level at which the
marginal benefit equals the marginal cost.
From Individual Supply to Market Supply
?market supply curve
A curve showing the relationship
between the market price and quantity
supplied by all firms, ceteris paribus.
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-14
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.2
THE SUPPLY CURVE
From Individual Supply to Market Supply
? FIGURE 3.4
From Individual to Market Supply
The market supply is the sum of the supplies of all firms. In Panel A, Lola is a low-cost producer
who produces the first pizza once the price rises above $2 (shown by point a).
Panel B, Hiram is a high-cost producer who doesn’t produce pizza until the price rises above $6
(shown by point f ).
To draw the market supply curve, we sum the individual supply curves horizontally. At a price of
$8, market supply is 400 pizzas (point m), equal to 300 from Lola (point d) plus 100 from Hiram
(point g).
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-15
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.2
THE SUPPLY CURVE (cont’d)
From Individual Supply to Market Supply
? FIGURE 3.5
The Market Supply
Curve with Many Firms
The market supply is the
sum of the supplies of all
firms.
The minimum supply price
is $2 (point a),
and the quantity supplied
increases by 10,000 for
each $2 increase in price to
10,000 at a price of $4
(point b), to 20,000 at a
price of $6 (point c), and so
on.
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-16
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.2
THE SUPPLY CURVE (cont’d)
Why Is the Market Supply Curve Positively Sloped?
To explain the positive slope, consider the two responses by firms to
an increase in price:
• Individual firm. As we saw earlier, a higher price encourages a
firm to increase its output by purchasing more materials and hiring
more workers.
• New firms. In the long run, new firms can enter the market and
existing firms can expand their production facilities to produce
more output.
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-17
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.3
MARKET EQUILIBRIUM: BRINGING
DEMAND AND SUPPLY TOGETHER
?market equilibrium
A situation in which the quantity
demanded equals the quantity supplied
at the prevailing market price.
Excess Demand Causes the Price to Rise
?excess demand (shortage)
A situation in which, at the prevailing
price, the quantity demanded exceeds
the quantity supplied.
Excess Supply Causes the Price to Drop
?excess supply (surplus)
A situation in which the quantity supplied
exceeds the quantity demanded at the
prevailing price.
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-18
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.3
MARKET EQUILIBRIUM: BRINGING
DEMAND AND SUPPLY TOGETHER (cont’d)
? FIGURE 3.6
Market Equilibrium
At the market equilibrium (point
a, with price = $8 and quantity =
30,000), the quantity supplied
equals the quantity demanded.
At a price below the equilibrium
price ($6), there is excess
demand—the quantity
demanded at point c exceeds
the quantity supplied at point b.
At a price above the equilibrium
price ($12), there is excess
supply—the quantity supplied at
point e exceeds the quantity
demanded at point d.
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-19
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.4
MARKET EFFECTS OF CHANGES IN DEMAND
Change in Quantity Demanded versus Change in Demand
? FIGURE 3.7
Change in Quantity Demanded versus Change in Demand
(A) A change in price
causes a change in
quantity demanded, a
movement along a
single demand curve.
For example, a
decrease in price
causes a move from
point a to point b,
increasing the quantity
demanded.
(B) A change in demand
caused by changes in a
variable other than the
price of the good shifts
the entire demand
curve. For example, an
increase in demand
shifts the demand curve
from D1 to D2.
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
?change in demand
A shift of the demand curve caused by a change in
a variable other than the price of the product.
3-20
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.4
MARKET EFFECTS OF CHANGES IN DEMAND
(cont’d)
Increases in Demand Shift the Demand Curve
?normal good
A good for which an increase in income
increases demand.
?inferior good
A good for which an increase in income
decreases demand.
?substitutes
Two goods for which an increase in the
price of one good increases the demand
for the other good.
?complements
Two goods for which a decrease in the
price of one good increases the demand
for the other good.
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-21
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.4
MARKET EFFECTS OF CHANGES IN DEMAND
(cont’d)
Increases in Demand Shift the Demand Curve
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-22
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.4
MARKET EFFECTS OF CHANGES IN DEMAND
(cont’d)
Increases in Demand Shift the Demand Curve
? FIGURE 3.8
An Increase in Demand
Increases the Equilibrium Price
An increase in demand shifts the
demand curve to the right: At each
price, the quantity demanded
increases.
At the initial price ($8), there is excess
demand, with the quantity demanded
(point b) exceeding the quantity
supplied (point a).
The excess demand causes the price
to rise, and equilibrium is restored at
point c.
To summarize, the increase in
demand increases the equilibrium
price to $10 and increases the
equilibrium quantity to 40,000 pizzas.
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-23
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.4
MARKET EFFECTS OF CHANGES IN DEMAND
(cont’d)
Decreases in Demand Shift the Demand Curve
? FIGURE 3.9
A Decrease in Demand Decreases the
Equilibrium Price
A decrease in demand shifts the
demand curve to the left: At each
price, the quantity demanded
decreases.
At the initial price ($8), there is
excess supply, with the quantity
supplied (point a) exceeding the
quantity demanded (point b).
The excess supply causes the
price to drop, and equilibrium is
restored at point c.
To summarize, the decrease in
demand decreases the equilibrium
price to $6 and decreases the
equilibrium quantity to 20,000
pizzas.
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-24
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.4
MARKET EFFECTS OF CHANGES IN DEMAND
(cont’d)
Decreases in Demand Shift the Demand Curve
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-25
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.5
MARKET EFFECTS OF CHANGES IN SUPPLY
Change in Quantity Supplied versus Change in Supply
? FIGURE 3.10
Change in Quantity Supplied versus Change in Supply
(A) A change in price causes a change in quantity supplied, a movement along a single supply
curve. For example, an increase in price causes a move from point a to point b.
(B) A change in supply (caused by a change in something other than the price of the product)
shifts the entire supply curve. For example, an increase in supply shifts the supply curve from S1
to S2. For any given price (for example, $6), a larger quantity is supplied (25,000 pizzas at point
c instead of 20,000 at point a). The price required to generate any given quantity decreases. For
example, the price required to generate 20,000 pizzas drops from $6 (point a) to $5 (point d ).
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-26
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.5
MARKET EFFECTS OF CHANGES IN SUPPLY
(cont’d)
Increases in Supply Shift the Supply Curve
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-27
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.5
MARKET EFFECTS OF CHANGES IN SUPPLY
(cont’d)
An Increase in Supply Decreases the Equilibrium Price
? FIGURE 3.11
An Increase in Supply Decreases
the Equilibrium Price
An increase in supply shifts the
supply curve to the right: At each
price, the quantity supplied
increases.
At the initial price ($8), there is
excess supply, with the quantity
supplied (point b) exceeding the
quantity demanded (point a). The
excess supply causes the price to
drop, and equilibrium is restored
at point c.
To summarize, the increase in
supply decreases the equilibrium
price to $6 and increases the
equilibrium quantity to 36,000
pizzas.
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-28
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.5
MARKET EFFECTS OF CHANGES IN SUPPLY
(cont’d)
Decreases in Supply Shift the Supply Curve
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-29
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.5
MARKET EFFECTS OF CHANGES IN SUPPLY
(cont’d)
A Decrease in Supply Increases the Equilibrium Price
? FIGURE 3.12
A Decrease in Supply Increases
the Equilibrium Price
A decrease in supply shifts the
supply curve to the left. At each
price, the quantity supplied
decreases.
At the initial price ($8), there is
excess demand, with the quantity
demanded (point a) exceeding the
quantity supplied (point b). The
excess demand causes the price to
rise, and equilibrium is restored at
point c.
To summarize, the decrease in
supply increases the equilibrium
price to $8 and decreases the
equilibrium quantity to 24,000
pizzas.
Copyright © 2012 Pearson Prentice Hall. All rights reserved.
3-30
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.5
MARKET EFFECTS OF CHANGES IN SUPPLY
(cont’d)
? FIGURE 3.13 Simultaneous Changes in Demand and Supply
Market Effects of Simultaneous Changes in Demand and Supply
(A) Larger increase in demand. If the increase in demand is larger than the increase in supply (if
the shift of the demand curve is larger than the shift of the supply curve), both the equilibrium price
and the equilibrium quantity will increase.
(B) Larger increase in supply. If the increase in supply is larger than the increase in demand (if the
shift of the supply curve is larger than the shift of the demand curve), the equilibrium price will
decrease and the equilibrium quantity will increase.
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3-31
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.6
PREDICTING AND EXPLAINING
MARKET CHANGES
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3-32
CHAPTER 3
Demand, Supply, and
Market Equilibrium
3.7
APPLICATIONS OF DEMAND AND SUPPLY
• We can apply what we’ve learned about demand and supply to
real markets.
• We can use the model of demand and supply to predict the
effects of various events on equilibrium prices and quantities.
•…
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