Question

In: Economics

6. How will the following events affect equilibrium price and quantity for the product highlighted in...

6. How will the following events affect equilibrium price and quantity for the product highlighted in italics? In each case, identify how the supply or demand curve shifts.

a. A drop in consumer incomes influences the demand for dry cleaning
b. Declining numbers of law school graduates affect the supply of legal services
c. Consumer expectations that the price of turkeys will soon rise affect the current demand for turkeys
d. A cost-saving technological innovation influences the supply of rice

Solutions

Expert Solution

Ans a) A drop in income leads to decrease in demand for dry cleaning which leads to excess supply of dry cleaning service causing a decrease in price for dry cleaning and decrease in equilibrium quantity of dry cleaning being done.
There would be a rightwards shift in the demand curve as a reault of this.

b) Lesser number of law graduated means lesser the supply of legal services i.e. supply for legal services decrease causing a situation of excess demand for legal services which causes an increase ik price for legal services but decrease in equilibrium quantity.

This causes supply curve to shift leftwards

c) The expectation of increase in price of turkey in future will increase the demand for turkey in present, this will cause an excess demand for turkeys in the market increasing the price of turkey and the equilibrium quantity of turkey sold.

This shifts the demand curve for turkey rightwards

d) The technological advancement in production of rice decreases the cost of production of rice increasing profits of the firms producing rice who then increases supply of rice which decreases the price of rice but increases the equilibrium quantity of rice sold in the market.

This causes a rightward shift of the supply curve of rice.

* Please don’t forget to hit the thumbs up button, if you find the answer helpful.


Related Solutions

Predict how each of the following events will affect the equilibrium price and quantity in the...
Predict how each of the following events will affect the equilibrium price and quantity in the Vancouver market for bottled water. In each case, only one change at a time happens. Sketch a separate graph for each part. (a)   People commit to using less plastic in everyday life. (b) Floods contaminate the urban water filtering system. (c)   Water-bottling companies and their products are banned from the province. (d) The price of all soda drinks doubles because of a tax. (e)  ...
Many changes are affecting the market for oil. Predict how each of the following events will affect the equilibrium price and quantity in the market for oil.
Learning Objective: 1. Define economics, macro and micro, and how economic questions are posed. Develop the baseline for the economic way of thinking.Assessment Objectives:Identify factors that affect demand.Graph demand curves and demand shifts.Identify factors that affect supply.Graph supply curves and supply shifts.Analyze market outcomes such as changes in equilibrium price and quantity.Question 1: Many changes are affecting the market for oil. Predict how each of the following events will affect the equilibrium price and quantity in the market for oil. In each...
The equilibrium price for a product is $58, and the quantity sold of the product is...
The equilibrium price for a product is $58, and the quantity sold of the product is 4060. The price elasticity of demand is -4.6, and the price elasticity of supply is 0.7. Find the demand curve and the supply curve for the product. (Your answer for the demand curve should be in the form Qd = a – bP, with specific numerical values given for a and b. Your answer for the supply curve should be in the form Qs...
The equilibrium price for a product is $32, and the quantity sold of the product is...
The equilibrium price for a product is $32, and the quantity sold of the product is 1280. The price elasticity of demand is -5.2, and the price elasticity of supply is 0.9. Find the demand curve and the supply curve for the product. (Your answer for the demand curve should be in the form Qd = a – bP, with specific numerical values given for a and b. Your answer for the supply curve should be in the form Qs...
The labor market for bagel bakers is in equilibrium. How will the following events affect the...
The labor market for bagel bakers is in equilibrium. How will the following events affect the equilibrium wage and labor employment in this market? Illustrate your answers graphically. (a) Suddenly, there is a severe supply disruption in the market for cream cheese, and the price of cream cheese rises. Assume that bagels and cream cheese are complements. (b) A new technology used in the production of bagels increases the productivity of bagel bakers.
Predict how each of the following events will raise or lower the equilibrium wage and quantity...
Predict how each of the following events will raise or lower the equilibrium wage and quantity of coal miners in West Virginia. (Do wages increase or decrease? Does the market quantity of workers increase or decrease?) [8 points] a. The price of oil rises b. New coal-mining equipment is invented that is cheap and requires few workers to run c. Several major companies that do not mine coal open factories in West Virginia, offering a lot of well-paid jobs. d....
How would each of the following events affect the quantity of corn supplied in the US...
How would each of the following events affect the quantity of corn supplied in the US and how would the typical corn producer’s profit be affected in the short-term and long-term? a. The price of soybeans increases dramatically overnight i. Supply of corn ii. Short-term profit iii. Long-term profit b. The price of butter and salt fall dramatically overnight i. Supply for corn ii. Short-term profit iii. Long-term profit c. A new machine is introduced that is cheaper and more...
Indicate how the newspaper headlines below affect supply and demand and equilibrium price and quantity. Each...
Indicate how the newspaper headlines below affect supply and demand and equilibrium price and quantity. Each headline describes a condition that affects either supply or demand, BUT NOT BOTH! You can simply draw up or down arrows. A OPEC Nations Agree on Quotas:Cut Production B New Vast Oil Reserves Discovered in North Sea C Economic Recovery Spreads Worldwide D New Gas-saving Engine Developed E Truck & SUV Sales Skyrocket
For each market whose product is highlighted in bold letters, sketch a graph showing the change in either demand or supply and the resulting change in equilibrium price and quantity
For each market whose product is highlighted in bold letters, sketch a graph showing the change in either demand or supply and the resulting change in equilibrium price and quantity (Start by drawing a demand-supply equilibrium and then show the change). In each case, identify the demand or supply factor causing the shift to justify your answer.a. (3.5 points) Engineers have discovered a more efficient way to produce aluminum that significantly reduces production costs of aluminum. Show its effects on...
1)How do the following events affect a monopoly firm’s price and output? How will it affect...
1)How do the following events affect a monopoly firm’s price and output? How will it affect the firm’s profits? Illustrate your answers graphically. a. an increase in labor costs in the market in which the firm operates b. a reduction in the price of gasoline c. the firm’s Chief Executive Officer persuades the Board to increase his or her annual salary d. demand for the firm’s product falls e. demand for the firm’s product rises f. the price of a...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT