MARKET FOR PEANUTS: Demand shifters (which one and which way, left or right) Going to baseball...

MARKET FOR PEANUTS:

Demand shifters (which one and which way, left or right)

Going to baseball games becomes more popular
Walnuts have been become cheap.

What would happen to price if Demand 1) and Supply 1) happened together? What would happen to quantity?

Expert Solution

a) When the baseball games become more popular, more people will go for the games. And hence, there will be more demand for peanuts.

Therefore, demand curve shifts towards the right.

b) When walnut becomes cheap, many people who were earlier consuming peanuts will shift to walnuts. This will reduce the demand for peanuts.

Therefore, the demand curve will shift towards left.

c) In case of demand increasing (like baseball becoming popular), the suppliers will find it difficult to satisfy customers. They will raise the price so that many people will back out. Hence the price increase.

And when the demand decreases (like walnut becoming cheaper), the suppliers will reduce the price to sell off the available goods. Therefore, price decreases.

d) As demand increases (like baseball becoming popular), prices will also increase and more suppliers will be willing to provide the peanuts. Hence the quantity increases.

As demand decreases (like walnut becoming cheaper), prices will also decrease and fewer suppliers will be willing to provide the peanuts. Hence the quantity decreases.

Rahul Sunny answered 2 years ago

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