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An increase in the current demand for beef would be caused by: i ) higher pork prices, and

Q6. 6. The number of children wanted by a family can be considered to be a function of the price or the cost of raising children. Such factors as food, clothing, schooling, and recreational expenses should be considered. The opportunity cost of having children should also be considered.

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An increase in the current demand for beef would be caused by: i ) higher pork prices, and

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  1. Q6 • 6. The number of children wanted by a family can be considered to be a function of the price or the cost of raising children. Such factors as food, clothing, schooling, and recreational expenses should be considered. The opportunity cost of having children should also be considered. • Any factor that would cause the demand curve to shift would also cause this demand curve to shift. The two most notable factors would be family income and personal desires or preferences for children. Changes in the price of complementary products may also shift the curve.

  2. Q8 • An increase in the current demand for beef would be caused by: • i) higher pork prices, and • ii) higher consumer incomes.

  3. Q9 • If prices rise too high, some people will not be able to afford to buy gasoline. However, high prices encourage greater supply, which is necessary in order to meet our demands for gasoline.

  4. Q 10 There are several answers to each question here. The following answers are examples. • a. Calgary • b. many towns in Canada, especially in Ontario, Quebec, and British Columbia • c. communities in northwestern Ontario • d. Sudbury, Ontario • e. several communities on both coasts and the Great Lakes

  5. Q13 • The effect on the price is difficult to determine. If there is a greater increase in demand than in supply, the price will rise. If there is a greater increase in supply than in demand, the price will fall. • If they change the same amount then there will be no increase in price at all.

  6. Q15

  7. Q16 • The supply of coffee is reduced, resulting in an increase in the price.

  8. Q17 • The demand for land in the downtown core is greater than in the suburbs. Therefore, the price of land is higher in the downtown core because the supply of land is limited downtown. Parking garages downtown have several levels in order to make better use of the high-priced land.

  9. Q18

  10. Q 20 • A bad crop would cause the supply of agricultural products to decrease, forcing up the price. When the demand is inelastic, an increase in the price causes an increase in total revenue. Therefore, a bad crop will increase farm incomes.

  11. Q 22 • a. postal service: inelastic; few substitutes • b. textbooks: inelastic; no substitutes • c. soft drinks: elastic; many substitutes • d. houses: inelastic; necessity • e. theatre tickets: elastic; luxury • f. home computer: elastic; luxury

  12. Q23 • The value of lumber is determined by multiplying the price by the quantity. If a reduction in quantity raised prices enough to increase the value, then the demand is inelastic.

  13. Q 25 • This question asks for the student’s opinion on the elasticity of demand for stamps. The student’s answer should relate to the number of substitutes for mailing a letter, the necessity of letters, and the percentage of a person’s or a company’s budget spent on postage.

  14. Q 26 • McDonald’s believes the price of elasticity of demand to be elastic. The prices were lowered in a recession and consumers are more likely to be price sensitive in poor economic times. Also, there are many substitutes for McDonald’s food indicating that the demand is likely to be elastic.

  15. Q 27 • As this value reaches 0 it states that the product is ineleastic…eggs are seen as a necessity.

  16. Q 29 • Is the price of the ticket an important factor in the decision to buy? For a very popular show, the price elasticity of demand may be inelastic. The quantity of tickets is fixed, so the price elasticity of supply is perfectly inelastic. If the concert or show is very popular, the price may go up just prior to the start of the concert. However, if there are many unsold tickets, the price may decrease just prior to the start of the show. Scalpers exist in markets with a fixed supply, otherwise the quantity supplied would increase in accordance with the increase in price.

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