In: Economics
Use supply and demand to explain and show the following real-world situations graphically and in a short paragraph. Be sure to explain what happens to the market quantity and price with a supply and demand diagram as precisely as possible.
a) The cost of producing sport utility vehicles (SUVs) decreases because tariffs are reduced on the steel and aluminum used to produce these vehicles. Explain what happens to the market quantity and price of SUVs.
b) The fungus Fusarium destroys 30% of worldwide banana production. Explain what happens to the market quantity and price of bananas.
c) On Valentine’s Day, the price of roses increased by more than the price of greeting cards. The price of greeting cards didn’t even appear to change. Why? You will want to use graphs of both the market for roses and the market for greeting cards to explain your answer.