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In: Economics

2. Use either a shift in demand OR a shift in supply (not both) to GRAPHICALLY...

2. Use either a shift in demand OR a shift in supply (not both) to GRAPHICALLY represent each of the following situations. Also, label the graphs correctly and indicate the changes in equilibrium in each case.
a) The avocado market: Widely publicized studies on the health benefits of avocado consumption.
b) Crude oil market: Interruption of world supplies as a result of the war in the Middle East.
c) Orange Juice Market: Increased imports of orange juice from Brazil.
d) Hotel room occupancy in Mexico: Increased Corvid 19 infection rate in the USA and Canada, the largest source of tourists to Mexico.

Four separate graphs, please.

Solutions

Expert Solution

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Ans) 1) When health benefits of avocado are publicized, people's preferences change and their demand for avocados increase. As a result, demand curve for avocado will shift to the right. Both price and quantity will increase.

2) As a result of war in the middle east, supply of crude oil will decrease because oil is mainly imported from these countries. Supply curve will shift to the left. Price will increase and quantity will decrease.

3) Increase in import will increase the supply of orange juice. Supply curve will shift to the right. Price will decrease and quantity will increase.

4) With decrease in number of tourists, demand for hotels will decrease. Demand curve will shift to the left. Both price and quantity will decrease.

Rahul Sunny answered 1 year ago
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