Graph the shift in Supply and/or Demand for all of the below scenarios. Also include an...

Graph the shift in Supply and/or Demand for all of the below scenarios. Also include an explanation AND the determinant (list is below).

Demand Determinants:

Tastes
Income for a normal good
Price of a substitutable good
Number of buyers
Expectations of changes in prices and incomes
Income of an inferior good
Price of a complementary good
Price of good itself

Supply Determinants:

Technology
Number of Sellers
Costs
Price of good itself

QUESTIONS:

1) The government gives out a tax rebate. What happens to the price and quantity of all inferior goods?

2) People expect the price of tea to increase. What happens to the price and quantity of all normal goods?

3) People start preferring Tea to coffee. What happens to the price and quantity of tea?

4) There is a baby boom. What happens to the price and quantity of diapers?

Solutions

Expert Solution

In each graph, price (P) and quantity (Q) are depicted along vertical and horizontal axes respectively. D0 and S0 are initial demand and supply curves, intersecting at point A. Initial equilibrium price is P0 and quantity is Q0.

(1) Demand determinant - Income of an inferior good

A tax rebate will increase disposable income, thus lowering the demand for an inferior good. Demand curve shifts to left, decreasing price and decreasing quantity. In following graph, D0 will shift leftward to D1, intersecting S0 at point B with lower price P1 and lower quantity Q1.

(2) Demand determinant - Expectations of changes in prices and incomes

An increase in expected price will increase current demand. Demand curve shifts to right, increasing price and increasing quantity. In following graph, D0 will shift rightward to D1, intersecting S0 at point B with higher price P1 and higher quantity Q1.

(3) Demand determinant - Taste

A positive preference toward tea will increase its demand. Demand curve shifts to right, increasing price and increasing quantity. In following graph, D0 will shift rightward to D1, intersecting S0 at point B with higher price P1 and higher quantity Q1.

(4) Demand determinant - Taste

A baby boom will increase the demand for diapers. Demand curve shifts to right, increasing price and increasing quantity. In following graph, D0 will shift rightward to D1, intersecting S0 at point B with higher price P1 and higher quantity Q1.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Graph the shift in Supply and/or Demand for all of the below scenarios. Also include an...

Graph the shift in Supply and/or Demand for all of the below scenarios. Also include an explanation AND the determinant (list is below). Demand Determinants: Tastes Income for a normal good Price of a substitutable good Number of buyers Expectations of changes in prices and incomes Income of an inferior good Price of a complementary good Price of good itself Supply Determinants: Technology Number of Sellers Costs Price of good itself QUESTIONS: 1) The cost of making plastic toys increases....

For the scenarios discussed below, use supply and demand curves and a graph to analyze what...

For the scenarios discussed below, use supply and demand curves and a graph to analyze what will happen to both price and quantity in equilibrium given the information available below 1.You are the CEO of Coca-cola. The FDA introduces a $2 per meal tax on fast-food (but not on drinks). Analyze the market for your products. It is the fast food sellers who are obliged to pay the tax to the state. 2. You are the CEO of Coca-cola. The...

For the scenarios discussed below, use supply and demand curves and a graph to analyze what...

For the scenarios discussed below, use supply and demand curves and a graph to analyze what will happen to both price and quantity in equilibrium given the information available below. Graphs MUST be half a page each. When it is impossible to pin down the direction of the effect, discuss what is more likely in your opinion and why. Make sure to differentiate between movements of curves and movements on curves. For example, you could say something like this: “the...

Show on a graph an appropriate shift in either supply or demand of skateboards, a normal...

Show on a graph an appropriate shift in either supply or demand of skateboards, a normal good, for each of the following scenarios. Write the supply or demand shifter that applied next to your graph e. The price of skateboards increases (demand) f. The price of ball bearings, an input for skateboards, increases g. Skateboard producers can make either skateboards or in-line skates. An increase in demand causes the price of in-line skates to increase h. Amid recession, average family...

Graph and shift the market or individual demand or supply curves accordingly. a) In the market...

Graph and shift the market or individual demand or supply curves accordingly. a) In the market for gasoline, the price of powerboats falls drastically. b) In the market for pomegranates, the government releases a study revealing that eating pomegranates reduce cancer risk. c) Jane likes butter or cream cheese on her bagels, and the price of butter rises. What happens to her demand curve for cream cheese and her demand curve for butter? d) In the market for salmon, the...

1. Illustrate the PPC 2. Illustrate a supply and demand graph and demonstrate a shift of...

1. Illustrate the PPC 2. Illustrate a supply and demand graph and demonstrate a shift of the curve 3. Determinants of supply and demand and how each determinant can shift the supply or demand curve 4. Market failure and its causes 5. The 4 phases of the business cycle 6. The GDP equation and each of the components 7. Calculate the unemployment rate, employment rate and labor force participation rate 8. Define inflation and the impacts of inflation

Create the supply and demand graph in the space below. Also identify the price and quantity at which equilibrium exists.

Price Quantity Demanded Quantity Supplied 60 118 95 70 111 98 80 106 102 90 101 106 100 98 110 Create the supply and demand graph in the space below. Also identify the price and quantity at which equilibrium exists. This information is important for the client to determine the quantity of oil to produce for profit maximization. Identify this information on the supply and demand graph you created below.

Using the principles of supply and demand, sketch an appropriate supply and demand graph, labeling all...

Using the principles of supply and demand, sketch an appropriate supply and demand graph, labeling all the lines, and use it to tell me why increasing the money supply causes interest rates to fall.

Use one graph to show the shift in demand and another graph to show the shift...

Use one graph to show the shift in demand and another graph to show the shift in supply. Compare the change in price in the two graphs. See if they are consistent in that both graphs suggest the same outcome for price, or not. Make the same comparison of the two graphs for quantity. If the supply and demand for a product both decrease, then equilibrium: A:Quantity must fall and equilibrium price must rise. B:Price must fall, but equilibrium quantity...

1. For each of the following scenarios, GRAPH how the supply and demand curve change. Indicate...

1. For each of the following scenarios, GRAPH how the supply and demand curve change. Indicate whether equilibrium price and quantity increase, decrease, or change ambiguously. (5 points)a. Market: Hot chocolate. Winter approaches and the weather grows colder. At the same time, hot chocolate producers have created a more efficient technology to harvest cocoa beans.b. Market: Swimming suits. The factory that produces swimming suits was flooded by Hurricane Cristóbal. Meanwhile, beaches open across the country.c. Market: Jumpsuits. Duchess Meghan Markle...

Subjects