Question

In: Economics

Supply and Demand of Flowers (Red Roses) at Valentine's Day. a). Analysis: i. Identify the market....

Supply and Demand of Flowers (Red Roses) at Valentine's Day.

a). Analysis:

i. Identify the market.

ii. Identify which curve is shifting.

iii. State which determinant of demand or supply is causing the shift.

iv. Identify the expected impact of this shift on equilibrium price and

quantity.

b). Graphical analysis:

i. Graphically show this shift.

1. identify the initial equilibrium price and quantity

2. draw the shift of the supply or demand curve, clearly indicating the direction of the shift

3. identify the new equilibrium price and quantity in comparison to the initial equilibrium price and quantity

4. label everything – the market, axes, curves, shifts, prices and quantities, etc.

Expert Solution

(a)

(i) The market under study is the Market For Red Roses.

(ii) We are examining the market for red roses on Valentine's Day. On Valentine's Day, demand for red roses increases.

So, demand curve will shift. It will shift to the right.

(iii) The determinant that is causing demand curve to shift is the taste and preferences.

On Valentine's Day, people like to give red roses to those whom they love or admire and due to this their taste for red roses changes in favorable manner leading to increase in demand for red roses.

(iv) Given the supply, this increase in demand or rightward shift of demand curve will lead to increase in equilibrium price and quantity.

(b)

Following is the required figure -

Rahul Sunny answered 2 years ago

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