A company named Kohler makes toilets. Suppose that the price of the Kohler flush valve (an...

A company named Kohler makes toilets. Suppose that the price of the Kohler flush valve (an input in producing a Kohler toilet) decreases. Suppose further that the price of a Moen (another kind of toilet) increases. Suppose a Moen toilet is a substitute for a Kohler toilet.

(6 points) Show graphically what happens in the Kohler toilet market. Briefly explain how each of the events affects supply or demand.

(3 points) Based on the graphs, tell whether equilibrium price or equilibrium quantity is indeterminate.

(3 points) Suppose you know that equilibrium price decreased and equilibrium quantity increased. Which event (Kohler flush valve price decrease or Moen price increase) had the greater impact on the Kohler toilet market? Explain.

Expert Solution

Rahul Sunny answered 2 years ago

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