Question

In: Economics

Either draw a diagram or describe how each of the following events affects both the equilibrium...

Either draw a diagram or describe how each of the following events affects both the equilibrium price and quantity of plastic bottled water.

You need to indicate the following:

1. What shifts: Supply or Demand.

2. What direction it shifts: left or right.

3. The resulting change in equilibrium price and quantity.

a. The price of soft drinks falls.

b. The health hazards of drinking sugary sodas are widely publicized.

c. There are wide spread reports of high levels of lead in tap water.

d. The use of refillable water bottles, such as Hydro Flasks becomes popular.

e. Consumers expect a hurricane to arrive later this week.

f. There are wide spread reports of dangers associated with drinking any water that comes in a plastic bottle.

g. All public schools are required to have water available at with school lunch as an alternative to milk cartons.

h. Global warming has caused an increase in average temperatures world-wide.

Solutions

Expert Solution

1. Supply would shift for any improvement in production technology with the same resources being used. It can also shift to left if the input price of raw material gets increase.
Demand would shift for raise or decrease in income, changes in price of substitutes, change in consumption pattern.

2. For decrease in demand or supply it would shift to left and for an increase it would shift to right.

3.

a. People would switch to soft drinks which make equilibrium price and quantity of plastic bottled water to shift left
b. People would switch to plastic bottled water which makes equilibrium price and quantity shift to right
c. People would switch to soft drinks which make equilibrium price and quantity of plastic bottled water to shift left
d. People would switch to plastic bottled water which makes equilibrium price and quantity shift to right
e. People would switch to plastic bottled water which makes equilibrium price and quantity shift to right
f. People would switch to soft drinks which make equilibrium price and quantity of plastic bottled water to shift left
g. People would switch to plastic bottled water which makes equilibrium price and quantity shift to right
h. People would switch to plastic bottled water which makes equilibrium price and quantity shift to right

Rahul Sunny answered 2 years ago
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