Question

Wenatchee is a town on a large river. On the other side of the river is East Wenatchee (since the river is the county line, these are in two different counties and thus, two different cities.) Wenatchee (which I refuse to call "West Wenatchee") is pretty much hemmed in on all sides by mountains. East Wenatchee, on the other hand, sits on a large plateau surrounded by wheat fields.

Assume that housing in Wenatchee and housing in East Wenatchee are what economists call "perfect substitutes." This means basically that people don't care whether they live in Wenatchee or East Wenatchee. Then imagine that in the nearest big city there is a pandemic followed by a bunch of riots. Part of the town is taken over by Marxists revolutionaries. The city starts dismantling the police and raising taxes because they have no money. (Just try to imagine it!) and this causes a lot of people to decide it would be nice to live in a smaller town on the other side of the mountains.

Which will grow more, Wenatchee or East Wenatchee? Why? Your answer should include econ words like "supply," "demand," "quantity supplied," "quantity demanded," and a certain important word from chapter 5. It should also probably include a graph or two.

Answer 1

The following solutions are given below and the graphs are in picture format. So refer that where I wrote refer fig.

# The Wenatchee will grow more because the heavy taxation in the East Wenatchee. The supply of wheat in East Wenatchee will decline and demand also decline due to the shifting of the East Wenatchee people to Wenatchee.The law of supply states that a better price results in a better amount provided which a cheaper price results in a lower amount provided.Supply curves and supply schedules square measure tools want to summarize the link between supply and price.

When economists remark provide, they mean the quantity of some goods or service a producer is willing to produce at every price. Price is what the producer receives for commercialism one unit of a decent or service. A rise in price nearly always results in a rise within the amount equipped of that goods or service, whereas a decrease in worth can decrease the number equipped.

According to economics, supply isn't constant as quantity supplied. Once economists discuss with supply, they mean the link between a spread of costs and also the quantities equipped at those prices—a relationship that may be illustrated with a supply curve or a supply schedule. Once economists discuss with amount equipped, they mean solely an exact purpose on the availability curve, or one amount on the availability schedule. In short, supply refers to the curve, and amount equipped refers to a selected purpose on the curve.

When the price of wheat rises, for example, it encourages profit seeking farmers, related to take several actions like choose a good location, soil preparation, weather requirements, pick a variety of wheat, seeding, planting, caring such as fertilisation, watering, weeding, pests and disease control and finally harvest.

The positive relationship between price and quantity supplied that a higher price leads to higher quantity supplied and lower price leads to a lower quality supplied the law of supply. (Refer fig 1(a &b) in picture)

Supply and demand, in economics, relationship between the quantity of a commodity that producers wish to sell at various prices and the quantity that consumers wish to buy. It is the main model of price determination used in economic theory. The price of a commodity is determined by the interaction of supply and demand in a market. The resulting price is referred to as the equilibrium price and represents an agreement between producers and consumers of the good. In equilibrium the quantity of a good supplied by producers equals the quantity demanded by consumers.(Refer fig 2 in picture).

The quantity of a commodity demanded depends on the price of that commodity and potentially on many other factors, such as the prices of other commodities, the incomes and preferences of consumers, and seasonal effects. In basic economic analysis, all factors except the price of the commodity are often held constant; the analysis then involves examining the relationship between various price levels and the maximum quantity that would potentially be purchased by consumers at each of those prices. The price-quantity combinations may be plotted on a curve, known as a demand curve, with price represented on the vertical axis and quantity represented on the horizontal axis. A demand curve is almost always downward-sloping, reflecting the willingness of consumers to purchase more of the commodity at lower price levels. Any change in non-price factors would cause a shift in the demand curve, whereas changes in the price of the commodity can be traced along a fixed demand curve. (Refer fig 3 in pictures).