Question

Please help with these four questions,

Question 1 0.16 pts The change in equilibrium shown in the accompanying figure would be explained by a(n) price ofa in the price of an input and a(n) in the increase; increase; complement decrease; increase; substitute increase; increase; substitute increase; decrease; complement decrease; increase; complement

Answer 1

1. increase; increase; complement

Increase in the price of input decreases the supply of good because it becomes more expensive for firm to produce more good. Complementary goods are those goods which jointly satisfy a particular want of consumer, increase in price of one good decreases demand of other and vice-versa.

2. Both demand and supply of goods and services increases which shifts demand and supply curve rightwards causing increase in equilibrium quantity for sure and ambiguous effect on price.

When increase in demand is greater than increase in supply then equilibrium price and quantity both rises.

When increase in demand is less than increase in supply then equilibrium price falls and quantity rises.

When increase in demand is equal to increase in supply then equilibrium price remains same while equilibrium quantity rises.

The equilibrium price will be indeterminate and the equilibrium quantity will go up.

3. shift of the demand curve to the left.

When demand of a good decreases due to change in factors other than the price of good itself then it causes Decrease in demand. It causes leftward shift of demand curve.

4. quantity always falls.

Leftward shift of demand and supply curve must decreases equilibrium quantity but an ambiguous effect on price.