Question

In: Economics

2. How will each of the following changes in demand and/or supply affect equilibrium price and...

2. How will each of the following changes in demand and/or supply affect equilibrium price and quantity in a competitive market. Underline the correct answer.

a. Supply decreases and demand remains constant. Price will: fall rise not change can’t tell Quantity will: fall rise not change can’t tell

b. Demand decreases and supply remains constant. Price will: fall rise not change can’t tell Quantity will: fall rise not change can’t tell

c. Supply increases and demand is constant. Price will: fall rise not change can’t tell Quantity will: fall rise not change can’t tell

d. Demand increases and supply increases. Price will: fall rise not change can’t tell Quantity will: fall rise not change can’t tell

e. Demand increases and supply is constant. Price will: fall rise not change can’t tell Quantity will: fall rise not change can’t tell

f. Supply increases and demand decreases. Price will: fall rise not change can’t tell Quantity will: fall rise not change can’t tell

g. Demand decreases and supply decreases. Price will: fall rise not change can’t tell Quantity will: fall rise not change can’t tell

Solutions

Expert Solution

a. Supply decreases and demand remains constant.

  • Price will: rise
  • Quantity will: fall

b. Demand decreases and supply remains constant.

  • Price will: fall
  • Quantity will: fall

c. Supply increases and demand is constant.

  • Price will: fall
  • Quantity will: rise

d. Demand increases and supply increases.

  • Price will: not change
  • Quantity will: rise

e. Demand increases and supply is constant.

  • Price will: rise
  • Quantity will: rise

f. Supply increases and demand decreases.

  • Price will: fall
  • Quantity will: not change

g. Demand decreases and supply decreases.

  • Price will: fall
  • Quantity will: fall

Note : To attempt such questions, draw supply and demand curves and then shift the curves according to the question, you will get your answer.

Increase in demand and supply shifts the curves to the right while decrease in demand and supply will shifts the curve to the left.

For any help, in this, let me know in the comment section.

Rahul Sunny answered 2 years ago
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