Question

supply and demand proplems

clearly identify the shock, draw graphs and label fully (indicate mkt), summarize impact on Pe and Qe

1- The United States finally comes out of a recession. Unemployment falls and incomes rise.How does this impact the market for good X,if good X is considered to be inferior?

2-a The government decides to impose quotas on imported steel industry. illustrate the impact on both the market for foreign steel in the USA and market for domestic steel.

b- if government imposed a tariff on steel instead , what would this look like ( draw graph ) is the impact the same?

c- how does the tariff ( changes in the domestic market) impact commercial construction that uses steel ?

Answer 1

Recession : It is a period of negative economic growth. In recession income of the people falls and unemployement began to rise.

Inferior goods : It refers to those goods which is usually purchased by the poor or low income group of people. It is inversely proportioned to the income of the people.  

1- If a country came out of a recession then automatically unemployment level will fall and income of the consumers will rise , this will tend conumers to shift their demand from inferior goods to better goods . Therfore the demand for good X(as inferior) will fall down.   

As in below figure it clearly indicates, besides the price(P) of inferior goods reamian the same the quantity demanded falls down(from Qto Q1) as the income of the consumer increases. As a result of this the demand curve shidts to left side i.e. from D to D1 .