Question

A) Draw a graph of individual demand and market demand

B) Suppose tax imposition,
Population is high,
Raw material expensive,
What is effect of consumer equilibrium. Explain and use graph

Answer 1

A)Individual demand curve represent the demand schedule of the individuals.Individual demand curve represent the relation between the price of commodities and the amount of commodities consumer wishes to buy.There is a negative relationship between the price and quantity demanded by the consumer.Hence the individual demand curve is negative sloping curve.

When we take the total sum of all the individual demand we get market demand.Market demand also depicts the total quantity of goods that all individuals are willing to buy at the given price is known as market demand.Market demand curve is also negatively sloped as the individual demand curve is negatively sloped.The market demand curve is taking the sum of individual demand curve

B)when the taxes are imposed the supply curve will shift upwards by the amount of tax imposed.When the tax is imposed on goods the price that consumer or buyer pays for the product must exceed the price seller receives.When the tax is imposed the consumers are forced to pay more.When the tax is imposed on the consumers the demand curve of the consumers will shift downwards.increased tax means less demand .There is upward shift in the supply curve when the tax is imposed on producers.The downward shift of the consumer demand curve and the upward shift of the supply curve are in same magnitude.When there is an increase in population there may be excess demand than the supply.When the raw materials becomes expensive the production may fall thus there will be no enough supply of goods to meet the demandWhen the price of raw materials increases there is decreased productivity and supply falls short of demand and shifts to the left.