Question

How do demand and supply change, and thus what are the impacts on price and quantity, due to the following changes:

1. Higher household income

2. Swiss residents become “greener“

3. Firms want to strongly position their newly-launched models

4. Plastic becomes more expensive

5. Oil becomes more expensive

6. Hotel prices in ski resorts become higher

7. Guest workers are no longer allowed in the country

8. New ski resorts open up

9. The lifts themselves become faster and less expensive to purchase and operate

10.Higher availability of inexpensive, high quality printers for private use 1

1. Higher availability of notebooks and PCs with high-quality graphics

12. Higher availability of e-mail and social media

13. Rising productivity and falling prices for inputs in the production of digital cameras

14. Higher availability of handy, and then smart phones, with digital cameras

Answer 1

1. Higher household income raises the purchasing power of the households. They can now more goods and services with more income. Thus the demand curve will shift forward. The rise in demand with the supply remaining same will cause equilibrium price and equilibrium quantity to rise.

2. If the residents become greener, this implies that they will buy less of goods and services to avoid generating more plastic waster and will reuse the existing goods with them. This will cause the demand curve to move backwards. This will cause the equilibrium price and equilibrium quantity to decline.

3. If firms want to strongly position their newly launched models, they will raise the supply of those models. The supply curve will move in the forward direction. Accordingly, the equilibrium price will fall and the equilibrium quantity will rise.

4. Plastic is the raw material used in most of the products. If it becomes expensive, the cost of production will increase. Thus, at the given price levels, the suppliers will supply lesser. This will shift the supply curve backwards. Due to this, equilibrium price will rise and the equilibrium quantity will decline.

(Only 4 sub parts in detail according to guidelines).