Homework answers / question archive / DeVry University, Chicago ECON ECON312 chapter 3 1)Give three explanations for the law of demand:     List five basic determinants of market demand that could cause demand to decrease

DeVry University, Chicago ECON ECON312 chapter 3 1)Give three explanations for the law of demand:     List five basic determinants of market demand that could cause demand to decrease

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1. 4. consumer expectations of substantial price increases in CD-ROM players

 

 

 

5. Describe and give a reason for the law of supply.

 

 

6. The U.S. Congress is considering passing an excise tax that would increase the price of a pack of cigarettes by $1.00. What would be the likely effect of this change on the demand and supply of cigarettes? What is likely to happen to cigarette prices and the quantity consumed if the tax bill is enacted?

 

 

7. Newspaper item: “Due to lower grain prices, consumers can expect retail prices of choice beef to begin dropping slightly this spring with pork becoming cheaper after midsummer,” the Agriculture Department predicted. “This reflects increasing supply,” the department said. Does the statement use the term “supply” correctly? What effects might this announcement have on consumer demand? Explain.

 

 

 

 

7. In the space below each of the following, indicate the effect [increase (+), decrease (–)] on equilibrium price (P) and equilibrium quantity (Q) of each of these changes in demand and/or supply.

P                            Q

1. 1. Increase in demand, supply constant                                                            
   2. Increase in supply, demand constant                                                            
   3. Decrease in demand, supply constant                                                          
   4. Decrease in supply, demand constant