Question

29

The graph below depicts the market for shoes. a. Use the diagram below to illustrate that a less expensive material is developed for the soles of shoes. Instructions: Use the tool provided 'New line' to draw a new line that reflects the market effect of this event. Plot only the endpoints of the line. Market for Shoes Tools New line 0 Quantity of shoes b. If a new, less expensive material is developed for the soles of shoes, the「TRT-e ect the equilibrium price to Click to select and the equilibrium quantity to Cick to selec!) shoes will (Click oselecti . This will cause

Answer 1

(a) Less expensive material will decrease the cost of input, causing firms to increase output. Supply will rise, shifting supply curve rightward to S2.

(b) The supply of shoes will increase. This will cause price to decrease and quantity to increase.