1. Indicate what happens to Supply, Demand and the Equilibrium when each of the items change....

1. Indicate what happens to Supply, Demand and the Equilibrium when each of the items change. You can draw an arrow or write Increase or Decrease. (Demand and Supply will not both be affected by each change.) Change Demand Supply Eq. Price Eq. Quantity Price of a complement falls Income falls (inferior good) Price of relevant resource rises Technology Advances Number of Sellers Rises Tax on Production increases

Solutions

Expert Solution

1) when Price of a complement falls demand for the good increases. Demand curve shifts right and the new equilibrium is at E'. The equilibrium price increases to P' and equilibrium quantity increases to Q'.

2) When Income falls (inferior good) the demand for the inferior good increases. Inferior good have negative income relation. Demand curve shifts right and the new equilibrium is at E'. The equilibrium price increases to P' and equilibrium quantity increases to Q'.

3) When Price of relevant resource rises cost of production increases which decreases profitability and supply decreases. The supply curve shifts left. new ewqilibrium is at E'. The equilibrium price increases to P' and equilibrium quantity decreases.

4) Technology Advances decreases cost of production which increases profitability and supply increases. The supply curve shifts right. new ewqilibrium is at E'. The equilibrium price decreases to P' and equilibrium quantity increases.

5) Number of Sellers Rise increases supply. The supply curve shifts right. new ewqilibrium is at E'. The equilibrium price decreases to P' and equilibrium quantity increases.

6) Tax on Production increases cost of production which decreases profitability and supply decreases. The supply curve shifts left. new ewqilibrium is at E'. The equilibrium price increases to P' and equilibrium quantity decreases.

Rahul Sunny answered 1 year ago

Next > < Previous

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).

a) Graphically portray supply and demand for a virus drug. Indicate what happens when the prices...

a) Graphically portray supply and demand for a virus drug. Indicate what happens when the prices are arbitrarily set either high or low. b) On another graph, demonstrate what happens to price and quantity of the virus drug in the short term and long term if the drug cures the virus.

For each of the following items, identify the direction of the change in demand and/or supply...

For each of the following items, identify the direction of the change in demand and/or supply for the good in question (indicated in italics), and determine the direction of the change in equilibrium price and quantity—using fully-labelled diagrams throughout. If a price or quantity outcome is uncertain, make the reason for the uncertainty clear. 5. Tickets to stage plays increase in price, leading to a change in the demand for a substitute, tickets to operas. 6. Tickets to pro football...

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...

Using the supply and demand analysis of the market for reserves, indicate what happens to the...

Using the supply and demand analysis of the market for reserves, indicate what happens to the federal funds rate (the cash rate in Australia), borrowed reserves, and nonborrowed reserves in the following situations holding everything else constant. (a) The Fed (central bank) raises the target federal funds rate. (b) The Fed (central bank) raises the interest rate on reserves above the current equilibrium federal funds rate (the cash rate).

Use short-run supply demand analysis to indicate how equilibrium price and quantity will change if the...

Use short-run supply demand analysis to indicate how equilibrium price and quantity will change if the following changes occur in the economy. Draw a supply and demand curve for each answer and provide a brief one sentence explanation. c) Immigration policy leads to a sharp reduction in the in-migration of Mexican workers. What happens to the market for low-wage labor in Los Angeles?

22. Using the supply and demand analysis of the market for reserves, indicate what happens to...

22. Using the supply and demand analysis of the market for reserves, indicate what happens to the federal funds rate, borrowed reserves, and nonborrowed reserves, holding everything else constant, under the following situations: d) The Fed raises the interest rate on reserves above the current equilibrium federal funds rate. e) The Fed reduces reserve requirements. f) The Fed reduces reserve requirements and then offsets this action by conducting an open market sale of securities.

For each of the following events, indicate whether it is a demand-side or a supply-side change...

For each of the following events, indicate whether it is a demand-side or a supply-side change and how the event affects that side of the economy. a. Consumers become more pessimistic about the economy. Demand decreases. Demand increases. Supply decreases. Supply increases. b. Technological changes enable workers to be more productive._____ Demand increases. Demand decreases. Supply increases. Supply decreases. c. Manufacturing firms expect steel prices to decrease significantly. ____Demand decreases. Supply decreases. Demand increases. Supply increases. d. The Affordable Care...

Directions: For each question, show what happens to Equilibrium price (P) and quantity (Q) using supply-demand...

Directions: For each question, show what happens to Equilibrium price (P) and quantity (Q) using supply-demand analysis. Clearly state your conclusion (e.g., "equilibrium price increases, while equilibrium quantity decreases" using the short-hand " ^P and vQ"). Be sure to complete and correctly label your graphs. Question 3: Part A: "Luddites" were a group of workers in England in the 19th century that went around destroying new, labor-saving machines because they saw the new technology as threats to their jobs (as...

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.

Subjects