Question

In: Economics

Provide to demand related in to supply related reasons why the equilibrium price would rise

Provide to demand related in to supply related reasons why the equilibrium price would rise

Solutions

Expert Solution

Consider the following fig.

So, here “D” be the demand curve and “S” be the supply curve and “E” be the equilibrium, => the equilibrium “P” and “Q” combination is given by, “Pe” and “Qe”. Now, given the supply curve if demand increases implied the equilibrium “P” will increases. So, here if “income of person” increases that will also increase the demand given supply, => “D” will increase, => equilibrium “P” increases. Similarly, if the “price of substitute good increases” or “price of complementary good decrease” that will also increase “D” given by “S”, => the equilibrium “P”. Similarly, because of some occasion people increase their demand for a particular good, => given the supply the equilibrium “P” increases.

Now, given the “D” if supply decreases implied the “S” will shift to the left side, => the equilibrium “P” increases. So, if input price increases that will increase the cost production, => producer reduce their supply, => equilibrium “P” increases. Similarly if government impose tax on a particular good that also reduce the supply as well as increase the equilibrium “P”. So, these are the some factor that can increase the equilibrium “P” of a commodity.


Related Solutions

Explain what happens to the equilibrium price and quantity when demand and supply change simultaneously?? (Provide...
Explain what happens to the equilibrium price and quantity when demand and supply change simultaneously?? (Provide different examples for each case, make examples as close as possible to reality. Please relate at least one case to COVID-19 pandemic) Case 1: D (increase), S (increase), Case 1: D (increase), S (decrease), Case 1: D (decrease), S (decrease), Case 1: D (decrease), S (increase).
what might the price rise indicate about either the demand for or the supply of the...
what might the price rise indicate about either the demand for or the supply of the product? if price were not allowed to rise what might be the undsirable result?
If both demand and supply increase, then the equilibrium price A) and equilibrium quantity increases. B)...
If both demand and supply increase, then the equilibrium price A) and equilibrium quantity increases. B) falls but the equilibrium quantity increases. C) could either rise or fall, but the equilibrium quantity increases. D) rises, and the equilibrium quantity could either increase or decrease. E) falls, and the equilibrium quantity could either increase or decrease.
Draw a supply and demand diagram with a perfectly elastic Supply. a- Determine the equilibrium price...
Draw a supply and demand diagram with a perfectly elastic Supply. a- Determine the equilibrium price and quantity on your graph. Label the relevant area of the graph with letters and determine consumer surplus, producer surplus and total surplus of the market at the equilibrium. b- Show that any deviation from the equilibrium results in a decrease in total surplus. c- Show the change in consumers, producers, and total surplus of the market as a result of an upward shift...
Indicate the movement of the supply and/or demand curves, and the impact on equilibrium price and...
Indicate the movement of the supply and/or demand curves, and the impact on equilibrium price and equilibrium quantity. The Russian government has restricted sugar availability to reduce the supply of illegal liquor (sugar is used to increase alcohol content). Russians also like to sweeten their tea with jam, another sugar product.
Let D = demand, S = supply, P = equilibrium price, and Q = equilibrium quantity....
Let D = demand, S = supply, P = equilibrium price, and Q = equilibrium quantity. What happens in the market for electric vehicles if the government offers incentives to manufacturers to produce more electric vehicles? Provide a graphical representation to your answer in question 5. The graph can either be hand-drawn or copied from the textbook or other online sources.
Draw a completely labeled supply and demand graph. Show the equilibrium point, the equilibrium price and...
Draw a completely labeled supply and demand graph. Show the equilibrium point, the equilibrium price and quantity show using the diagram and explain in words, why a price above the equilibrium price would fall given a free market process and the same for a price below the equilibrium price.
For each of the following, explain the possible effects on demand and/or supply and equilibrium price...
For each of the following, explain the possible effects on demand and/or supply and equilibrium price and quantity of spiral bound notebooks using a correctly labeled supply and demand graph. Assume the market for spiral bound notebooks is in equilibrium. All students in public schools need notebooks of some type when they attend classes. For each of the following, explain the possible effects on demand and/or supply and equilibrium price and quantity of spiral bound notebooks using a correctly labeled...
Show in a diagram the effect on the demand curve, the supply curve, the equilibrium price,...
Show in a diagram the effect on the demand curve, the supply curve, the equilibrium price, and the equilibrium quantity of each of the following events. a. The market for steel in the United States: Fuel efficiency regulations have reduced the use of steel in automobile production and increased the use of lighter materials such as aluminum AND import restrictions limit the amount of steel that can be imported into the United States. b. The market for international airline tickets:...
Question: Equilibrium price must decrease if: a. demand increases and supply increases b. demand increases and...
Question: Equilibrium price must decrease if: a. demand increases and supply increases b. demand increases and supply decreases c. demand decreases and supply decreases d. demand decreases and supply increases
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT