In each of the following cases, use a diagram to show which curve, supply or demand,...

In each of the following cases, use a diagram to show which curve, supply or demand, shifts, and explain how the market transitions to a new equilibrium price and quantity. Be sure to include both supply and demand in your diagrams.

•Tina Turner is a legend of R&B and soul music. Given her advanced age, she will probably die soon. What does this do to the market for Tina Turner collectibles and memorabilia?

•In November, 2015, a series of coordinated terrorist attacks occurred in Paris, France; 130 people were killed. How would this have affected the market for hotels in France?

•Steel workers unionize and negotiate for higher wages and safer working conditions.

•Overnight, half of the population of St. Catharines become millionaires. How does this affect Niagara’s fine dining industry?

•A government-funded public information campaign warns of the dangers of STIs.How will this impact the market for prostitution?

•In 1976, Pablo Escobar founded the Medellin Cartel, which ruthlessly murdered competitors, and ended up controlling 80% of the United States’ cocaine market.

Solutions

Expert Solution

In each of the following graph, price (P) and quantity (Q) are shown along vertical and horizontal axes respectively. D0 and S0 are initial demand and supply curves, intersecting at point A. Initial equilibrium price is P0 and quantity is Q0.

(1)

Advanced age of the musician will increase the demand of her collectibles. Demand curve shifts to right, increasing price and increasing quantity. In following graph, D0 will shift rightward to D1, intersecting S0 at point B with higher price P1 and higher quantity Q1.

(2)

Terrorist attack will decrease the attraction of Paris as a tourist spot, thus lowering the demand for hotel stays. Demand curve shifts to left, decreasing price and decreasing quantity. In following graph, D0 will shift leftward to D1, intersecting S0 at point B with lower price P1 and lower quantity Q1.

(3)

Higher wage caused by effective unionization will increase production cost for firms, which will make firms reduce production, lowering supply. Supply curve shifts to left, increasing wage rate and decreasing quantity. In following graph, S0 will shift leftward to S1, intersecting D0 at point B with higher price P1 and lower quantity Q1.

(4)

Increase in income of consumers will increase the demand for fine dining. Demand curve shifts to right, increasing price and increasing quantity. In following graph, D0 will shift rightward to D1, intersecting S0 at point B with higher price P1 and higher quantity Q1.

NOTE: As per Answering Policy, 1st 4 questions are answered.

Rahul Sunny answered 11 months ago

Next > < Previous

Related Solutions

Demand and supply. Show in a diagram the effect on the demand curve, the supply curve,...

Demand and supply. Show in a diagram the effect on the demand curve, the supply curve, the equilibrium price and quantity of each of the following pairs of events. a. The market for hand-sanitizers in New York at the beginning of April 2020. i. The number of Covid-19 cases increases exponentially starting from 1st March 2020; ii. On March 9, 2020 New York State Governor Andrew Cuomo allowed for state production of hand-sanitizers. b. The market for touristic services in...

show in a diagram the effect on the demand curve(if applicable), the supply curve(if applicable), the...

show in a diagram the effect on the demand curve(if applicable), the supply curve(if applicable), the equilibrium price, and the equilbrium quantity of each of the following events .Then state clearly what happens to the equilibrium price and quantity. a. the market for steel in the us. Fuel efficiency regulatons have reduced the use of steel in automobile production and increased the use of lighters materials such as aluminum, and (ii) import restrictions limit the amount of steel that can...

Show in a diagram the effect on the demand curve, the supply curve, the equilibrium price,...

Show in a diagram the effect on the demand curve, the supply curve, the equilibrium price, and the equilibrium quantity of each of the following events. a. The market for steel in the United States: Fuel efficiency regulations have reduced the use of steel in automobile production and increased the use of lighter materials such as aluminum AND import restrictions limit the amount of steel that can be imported into the United States. b. The market for international airline tickets:...

For each of the following scenarios, use a well-labeled diagram of the supply and demand for...

For each of the following scenarios, use a well-labeled diagram of the supply and demand for saving and investment to analyze the effects on the real interest rate, equilibrium national savings, and equilibrium investment. a) U.S. military involvement abroad declines. As a result, the government deficit shrinks. b) A new generation of computer-controlled machines becomes available. These machines produce manufactured goods much more quickly with fewer defects. c) Concerns about job security cause people to engage in more precautionary savings....

For each of the following scenarios, use a supply and demand diagram to illustrate the effect...

For each of the following scenarios, use a supply and demand diagram to illustrate the effect of the given shock on the equilibrium price and quantity in the specified competitive market. Explain whether there is a shift in the demand curve, the supply curve, or neither. (a) (5 points) An unexpected temporary heat wave hits the East Coast. Show the effect in the ice cream market in New England. (b) (5 points) The government introduces a tax on ice cream...

For each of the following, use the budget constraint/indifference curve diagram to show what happens to...

For each of the following, use the budget constraint/indifference curve diagram to show what happens to the demand curve for good X: *note: each question requires two graphs -- one showing the indifference curves and one showing the demand curves a) A change in preferences that favors good Y over good X. b) An increase in the price of a substitute for good Y when good Y is a normal good c) An increase in the price of a substitute...

Draw a supply and demand diagram for the market for food. (a) If the Supply curve...

Draw a supply and demand diagram for the market for food. (a) If the Supply curve is perfectly elastic, what happens to price and quantity when demand shifts? (b) If the Demand curve is perfectly inelastic, what happens to price and quantity when supply shifts?

Use demand and supply curves to show how equilibrium is restored after the supply curve is...

Use demand and supply curves to show how equilibrium is restored after the supply curve is affected by an improvement in technology that increases productivity.

4.2. COMPARATIVE STATICS: ASPARTAME, OIL. For each of the following, use a supply and demand diagram...

4.2. COMPARATIVE STATICS: ASPARTAME, OIL. For each of the following, use a supply and demand diagram to deduce the impact of the event on the stated market. Would you expect the impact to be primarily on price or quantity? Feel free to mention issues that you don't think are captured by a traditional supply and demand analysis. (a) Event: The FDA announces that aspartame may cause cancer. Market: Saccharin. (Note: aspartame and saccharin are low-calorie sweeteners.) (b) Event: Oil price...

Question 5 (May -18) For each of the following scenarios, use a supply and demand diagram...

Question 5 (May -18) For each of the following scenarios, use a supply and demand diagram to illustrate the effect of the given shock on the equilibrium price and quantity in the specified competitive market. Explain whether there is a shift in the demand curve, the supply curve or neither An unexpected temporary heat wave hits Africa. Show the effect on the demand and price of bottled water The government introduces a tax on water which is paid by producers....

Subjects