Question

What is the effect on the equilibrium in the apple juice market if apple juice becomes less popular and a cheaper robot is used to pick apple? Make a graph or two graphs to illustrate the change (just focus on the effect of these 2 changes, and make assumptions when needed

Answer 1

Solution:-

Given that

As apple juice becomes less popular

demand for apple juice decreases

demand curve for apple juice shifts leftward.

As cheaper robot is used to pick apple more technologies advancement takes place profits increase supply increase supply curve shifts rightward.

Graphical flustration

Case I:

Assuming increase in supply is more than decrease in demand

Equilibrium shifts from E to E'

Equilibrium price falls

Equilibrium quantity rises

Case II:

Increase in supply < Decrease in demand

E shifts to E'

Equilibrium price falls

Equilibrium quantity falls

Case III:-

Increase in supply = Decrease in demand

E shifts to E'

Equilibrium price falls

Equilibrium quantity remians same

So we observe that with both the effects of equilibrium price of juice always falls however equilibrium quantity of apple juice may increase or decrease or remians same depending upon the magnitude of the shift of each curve.

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