Question

In: Economics

Assuming a normal market, with a positively sloped supply and negatively sloped demand, which is initially...

Assuming a normal market, with a positively sloped supply and negatively sloped demand, which is initially in equilibrium. Given the situation stated below, fill in the blanks using the pull down menu.

Market for GAS

Significant new oil reserves are discovered domestically and a new low cost fuel injection system is developed that doubles the gas mileage of most automobiles. As a result,

(a)

Fill in the blanks:

Supply will ____________

(b)

Fill in the blanks:

Demand will ____________

(c)

Fill in the blanks:

Equilibrium price will ____________

(d)

Fill in the blanks:

Equilibrium quantity will ____________________

Solutions

Expert Solution

Answer a) On the basis of information provided in the question,

Supply will increase because new oil reserves are discovered.

Answer b) As new low cost fuel injection system is developed that doubles the gas mileage of automobiles therefore consumer will demand less gas as its efficiency has increased.

Hence demand will decrease.

Answer c) Due to increase in supply, supply curve will shift towards right and due to decrease in demand, demand curve will shift left.

Equilibrium price will fall.

Answer d) Change in equilibrium quantity will depend on the increase in quantity supplied and decrease in quantity demanded.

Case 1:Increase in Supply =Decrese in Demand

Equilibrium quantity will remain same as before.

Case2: Increse in supply is greater than decrease in demand

Equilibrium quantity will increase.

Case3: Increase in supply is less than decrease in demand

Equilibrium quantity will fall.

Rahul Sunny answered 3 years ago
Next > < Previous

Related Solutions

Assuming a normal market, with a positively sloped supply and negatively sloped demand, which is initially...
Assuming a normal market, with a positively sloped supply and negatively sloped demand, which is initially in equilibrium. Given the situation stated below, fill in the blanks matching the effect as either: increase, decrease, no change or indeterminate (cannot determine).   Market for IBM computers Technology improves for the production of IBM computers, and consumers preferences for Apple computers increases due to Apple's unique application programs (a) Supply will  (Click for List) increase not change decrease is indeterminate (unable to determine) (b)...
Write down the definition of "supply curve". Is the supply curve positively sloped or negatively sloped?...
Write down the definition of "supply curve". Is the supply curve positively sloped or negatively sloped? Explain why by pointing out the foundamental economic assumption that determines the slope of the supply curve.
Write down the definition of "supply curve". Is the supply curve positively sloped or negatively sloped?...
Write down the definition of "supply curve". Is the supply curve positively sloped or negatively sloped? Explain why by pointing out the foundamental economic assumption that determines the slope of the supply curve.
Two relationships link inflation, output and unemployment: the positively sloped aggregate supply curve and the negatively...
Two relationships link inflation, output and unemployment: the positively sloped aggregate supply curve and the negatively sloped aggregate demand relation. Explain briefly the linkages in each relationship. Use charts as necessary. Give a very detailed explanation.
Explain why aggregate demand curve is negatively sloped by taking the link between the goods market...
Explain why aggregate demand curve is negatively sloped by taking the link between the goods market and money market.
Describe the two complementary explanations for why the aggregate supply curve is positively sloped.
Describe the two complementary explanations for why the aggregate supply curve is positively sloped.
1. The individual labor supply curve will be negatively sloped if the substitution effect of wages...
1. The individual labor supply curve will be negatively sloped if the substitution effect of wages is: Group of answer choices a) Weaker than the income effect of wages. b) Equal to the income effect of wages. c) Stronger than the income effect of wages. d) Negative. 2. Ceteris paribus, if immigration to the United States increases the number of workers, the market labor-supply curve will shift to the: Group of answer choices a) Right and the equilibrium wage rate...
4. Explain why the aggregate supply curve is positively sloped during the short run and vertical...
4. Explain why the aggregate supply curve is positively sloped during the short run and vertical in the long run. 5. List some examples of factors that will shift the aggregate demand curve. 6. List some examples of factors that will shift the long-run aggregate supply curve.
Suppose the market is initially in equilibrium, and then demand decreases while supply decreases, the equilibrium...
Suppose the market is initially in equilibrium, and then demand decreases while supply decreases, the equilibrium price will _________ and the equilibrium quantity ______________ . A.) Rise; will increase B.) Rise; is ambiguous/indeterminate C.) Drop; is ambiguous/indeterminate D.) Ambiguous/indeterminate; will fall
Consider the market for cable TV. (a) Assuming it’s a monopoly, draw the supply-and-demand diagram and...
Consider the market for cable TV. (a) Assuming it’s a monopoly, draw the supply-and-demand diagram and indicate a possible monopoly price. Using letters in your diagram, show CS, PS, and the DWL that results from the insufficient competition in this market. (b) What type of policy would you recommend to return this market to the efficient equilibrium? Briefly explain and illustrate in your diagram.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT