The citizens of Splashville enjoy swimming all summer long. Assume that the quantity of swimsuits demanded in a given year depends only on theaverage temperature that summer and the price of swimsuits. Additionally, assume that the cost of Lycra (a synthetic elastic fabric used to produceclose-fitting clothing such as swimsuits) represents the great majority of swimsuit manufacturers' costs and that every other determinant of supplyremains constant over this time period. The following table shows the average summer temperature and the price of Lycra in Splashville for each yearfrom 1995 to 2007.Avg TempPrice of LycraYear(F°)(Dollars per yard)1995759.1996801019978510199875101999802000908.2001857.2002858.2003808.20048013200585132006851220077512The following diagram shows the price of swimsuits and the quantity of swimsuits sold in Splashville for each year from 1995 through 2007. On thefollowing diagram, use the blue line (circle symbol) to connect all the points for which the average temperature was 85 degrees. Then use the orangeline (square symbol) to connect all the points for which the price of Lycra was $8 per yard. +502005452004Demand (85)+4020063530+Price (Lycra)= 82007199725+19962000+2019982002+1519952003200110 +1999235 610QUANTITY (Thousands of swimsuits)What does the blue line you drew represent?A historical graph showing how the price of swimsuits declined over the years in questionThe supply curve for swimsuits vwhen the price of Lycra is $8 per yardThe supply curve for swimsuits when the average temperature is 85 degreesThe demand curve for swimsuits when the average temperature is 85 degreesThe demand curve for swimsuits when the price of Lycra is $8 per yardWhat is the primary cause of the high price of a swimsuit in 2004 and 2005?Wages of swimsuit manufacturers fell.The price of Lycra increased.Temperatures were above average.Temperatures were below average.Assume that this year, the average temperature is projected to be 85 degrees, and the price of Lycra is $8 per yard. From the previous diagram, theequilibrium price of swimsuits is most likely to beand the equilibrium quantity is most likely to bePRICE (Dollars per swims uit)+8

A average temparature is 80 degrees were Years 1996, 1999, 2003 and 2004 only, we need to Connect…

perature that summer and the price of swimsuits. Additionally, assume that the cost of Lycra (a synthetic elastic f clothing such as swimsuits) represents the great majority of swimsuit manufacturers' costs and that every other c stant over this time period. The following table shows the average summer temperature and the price of Lycra i s - 2007. Avg Temp Price of Lycra (F°) (Dollars per yard) 75 80 10 85 10 75 10 80 7 90 8. 85 7. 85 8. 80

perature that summer and the price of swimsuits. Additionally, assume that the cost of Lycra (a synthetic elastic f clothing such as swimsuits) represents the great majority of swimsuit manufacturers' costs and that every other c stant over this time period. The following table shows the average summer temperature and the price of Lycra i s - 2007. Avg Temp Price of Lycra (F°) (Dollars per yard) 75 80 10 85 10 75 10 80 7 90 8. 85 7. 85 8. 80

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter12: The Supply Of And Demand For Productive Resources

Section: Chapter Questions

Problem 11CQ

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