Author Question: More firms produce MP3 players or electronics workers' wages rise? (Draw the diagrams) What will ... (Read 88 times)

KimWrice · **on:** Jun 29, 2018

More firms produce MP3 players or electronics workers' wages rise? (Draw the diagrams)

What will be an ideal response?

Question 2

How is the market demand schedule derived from individual demand schedules? How does the market demand curve differ from an individual demand curve?

What will be an ideal response?

fauacakatahaias · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

An increase in the number of firms that produce MP3 players increases the supply of MP3 players. The supply curve of MP3 players shifts rightward. Demand remains unchanged. The price of an MP3 player falls and the quantity of MP3 players increases. You can illustrate this outcome by drawing a diagram like Figure 3.9 on page 70.
A rise in the wages of electronic workers decreases the supply of MP3 players because it increases the cost of producing MP3 players. The supply curve of MP3 players shifts leftward. Demand remains unchanged. The price of an MP3 player rises and the quantity of MP3 players decreases.
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Answer to Question 2

We would derive the market demand schedule by summing the individual demands at every possible price. So, for example, if Consumer 1 would buy 6 units of a good when the price is 5 and Consumer 2 would buy 4 units, then the market demand at 5 is 10 units.
The market demand curve is the sum of the individual demand curves of all the potential buyers. The market demand curve plots the relationship between the total quantity demanded and the market price, holding all else equal.