Demand Curve
... most of its high-quality, accessible natural resource deposits. Other countries still have many high-quality, accessible deposits of natural resources. 2. Technology is helping U.S. firms to lower costs, by increasing their productivity while decreasing their human labor force. Using technology, the productivity of each employee within the firm is very high. The pay role for employees is less simply, because there are much fewer employees, but the profits of the company increase, because the productivity increases. 3. Technological advances in the mining industry are not changing the prices of the products, but they are changing the amount of product produced. The coal industry wants to sell more products at the same price, thereby moving the demand curve to the right. This is a change in supply not in quantity supplied. Answers to "Use Your Economic Reasoning" on pages 92 & 93 1. See Graphs at bottom of next page. As the demand was going up for students with college degrees the supply was not able to keep up. More and more companies were willing and able to pay for college educated people, but there were not enough college graduates to "go around." So the companies that got the college graduates were the ones who were willing to pay the most money. These inflated the entire market of incomes for college graduates, because the demand was so much greater than the supply. 2. Now we will find that the supply of college graduates is gradually catching up to the demand for them. Unless the demand for college graduates continues to grow, as I suspect and hope it will, we will reach an equilibrium were the only difference in pay between high school and college graduates will be the cost of going to college. In this case, the amount that people are willing to pay for a college graduate will not be as high because there are a lot more college graduates in the market. The supply will also level out, because high school students will no longer believe that it is to their advantage to go to college, because the incentive is not that great. Answers to 1, 2, & 7 of "Problems and Question for Discussion" on pages 104 & 105 1. To me a need is something that you literally can not live without. If you have the ability to pay for a need, then you had better pay for it--needs are not really a choice. Needs are not things we choose, needs are things that are existence as humans force upon us. Clearly the girl who won't buy a shirt because she wouldn't want to use her allowance money is not in need of that shirt. She has the ability to buy the shirt. She simply is not willing to buy it with her own money. Shirts can be a need but they are not a need when we choose something that we want (having an allowance savings) instead of something that we need. Demand depends on both willingness and ability. If people are willing to pay the going price for something and have the ability to do so, then demand tells them that they can have it. Demand includes not just what people need to buy, but also what people want to buy. Demand governs the bread market (bread being more of a need then a want) and it governs the computer game market (computer games being to me a clear example of a want and not a need.) 2. Unless Podunk College had just made a substantial increase in the cost of attending it, the drop in enrollment has to be in the demand rather than the quantity demanded. This means that for some reason the entire demand curve for Podunk Colleg...