Question

Variables typically included in a multivariate demand function (other than the price and quantity of the item the demand function represents) are consumer tastes and preferences, the number of buyers, spendable (disposable) income, prices of substitute goods, prices of complementary goods, advertising expenditures, weather, and expectations. Recalling that the price of the item being considered is placed on the vertical axis, and the quantity on the horizontal axis, the other variables are termed demand shifters. Please answer the following questions about the affect changes in other variables might have on the demand for the item. These changes will either cause demand to increase (shift right) or decrease (shift left). Use either word as applicable, for the short answer.

1. If the demand for a specific brand of a good (for which many substitutes exist) decreases and there is no decrease in the demand for this type of good, then the demand for a substitute _____________ .

2. If the number of potential consumers for the good being considered decreases, then the demand for the good being considered likely:

3. If the demand for Lattes increases, then the demand for biscotti (a complementary good) should:

4. Suppose new antioxidant properties for broccoli are discovered. Antioxidant properties supposedly help prevent cancer. As a result of this discovery, the demand for broccoli can be expected to:

5. The Organic Light Emitting Diode (OLED) is a new and promising display technology. It promises to permit display screens to be thin, flexible, and bright. It is currently available only in small size. This technology works somewhat like a firefly, utilizing electroluminescence. However its competitor, the Liquid Crystal Display (LCD), can now be produced as one piece panels up to six feet tall. The OLED is its own light source, requiring no backlighting as does a LCD. Assuming the LCD and OLED have the same sized screen, future demand for the older LCD display can probably be expected to __________ .

Variables typically included in a multivariate supply function (other than the price and quantity of the item the supply function represents) are prices of other goods that use similar input resources for production, the number of suppliers, techniques of production, taxes and subsidies, prices of input resources, weather, and expectations. Please answer the following questions about the affect changes in other variables might have on the supply of the item. These changes will either cause supply to increase (shift right) or decrease (shift left). Use either word as applicable, for the short answer.

1. If the market price of gasoline returns to the near $4.00 per gallon level then demand for gas-gulping large autos is likely to decrease and manufacturers of these autos are likely to _____________ their supply:

2. A relative increase in the productivity of the technology used to produce the item being considered is likely to _____________________ its supply.

3. Hailstorms have pelted south central Texas grape vineyards, spoiling acres of grapes. This is likely to ______________ the supply of grapes for Texas wine.

4. A manufacturer, operating with a fixed production budget, discovers that the cost of input resources is increasing. The manufacturer is likely to ___________________ the quantity of the product produced.

5. The six-spotted evil weevil has attacked California’s broccoli crops. Their supply of broccoli is thus likely to:

Answer 1

Q4.

1. If the demand for a specific brand of a good (for which many substitutes exist) decreases and there is no decrease in the demand for this type of good, then the demand for a substitute Increase

This is because as the market demand is same as earlier thus the other firm in the market producing the same type of good must have saw an increased level of demand

2. If the number of potential consumers for the good being considered decreases, then the demand for the good being considered likely decreased

This is because the number of consumers are proportionate to the demand of the good.thus if number of consumers decrease thus demand for the good being considered likely decreased.

3.If the demand for Lattes increases, then the demand for biscotti (a complementary good) should Increase

This is because complementary gooods share the property that consumption of both goods face joint demand. For eg, Suger and Milk. Hence when demand for one good should increase as well

4. Suppose new antioxidant properties for broccoli are discovered. Antioxidant properties supposedly help prevent cancer. As a result of this discovery, the demand for broccoli can be expected to Increase

As broccoli's antioxidant properties have been discovered thus its demand is assumed to increase.