Question
In: Economics
Explain the effects of the following events an demand and or supply a) It is discovered...
Explain the effects of the following events an demand and or supply
a) It is discovered that oranges can cure (bad skin/spot) . b) Anew
machine is developed that will automatically pick oranges c) The
price of grapefruits, a close substitute of oranges increases. d )
A craze of horse riding e) Govt raises minimum wages to
$15.00.
Solutions
Expert Solution
Answer A) -demand curve will shift rightwards, demand will increase .
It is discovered that oranges can cure (bad skin/spot)-
Due to it demand for oranges will increase and demand curve will shift rightwards.
Answer B) Supply curve will shift rightwards, supply will increase.
Anew machine is developed that will automatically pick oranges. Due to the technological enhancement cost of picking oranges will reduce and supply will increase.
Answer c) Demand of grapes will decrease and impact on oranges demand is uncertain.
The price of grapefruits, a close substitute of oranges increases. Demand of grapes will decrease and impact on oranges demand is uncertain. The reason is that they are not perfect substitutes. They are close substitutes. Increase in price of grapes will decrease the demand of grapes and demand curve will shift leftwards.
Answer D) demand curve will shift rightwards, demand will increase .
A craze of horse riding. Due to it people want to do more horse riding and demand for horse riding will increase.
Answer E) Increase in supply of labor. Supply curve of labor shift rightwards due to Govt raises minimum wages to $15.00.
Rahul Sunny answered 2 years agoRelated Solutions
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