Question

3) Using the supply and demand model, illustrate how each of the following events likely to affect equilibrium price and equilibrium quantity in the strawberry jelly market. Use well-labeled supply and demand curves for each case.

--> Consumers in this market are likely to consume 1 slice of wheat bread along 1 tablespoon of strawberry jelly. There is a decrease in the price of wheat bread. The medical community claims that consuming strawberry jelly increases your blood sugar. Decrease in the price for sugar (a raw input used in producing jellies). A weak strawberry season, leads to an increase in prices for fresh strawberries.

Only accurate answers please.

Answer 1

There is a 4-step method that permits us to predict how an event will have an impact on the equilibrium price and wide variety making use of the supply and demand framework.
Step one in all this process is to draw a requirement and provide model representing the main issue earlier than the fiscal occasion took situation.
Step two of this system is to decide whether the economic occasion being analyzed influences demand or provide.
Step three of this process is to decide whether or not the effect on demand or deliver causes the curve to shift to the right or to the left and to sketch the new demand or deliver curve on the diagram.
Step 4 of this approach is to establish the new equilibrium after which compare the normal equilibrium rate and variety to the brand new equilibrium cost and number.
Alterations in equilibrium cost and variety: the four-step approach

Let's desirous about changes in equilibrium rate and quantity with the aid of imagining a single event has happened. It probably an event that impacts demand like a transformation in sales, populace, tastes, costs of substitutes or enhances, or expectations about future prices. Or, it probably an event that affects supply like a transformation in traditional conditions, enter costs, technology, or executive policies that impact production.
How do we know how an financial occasion will affect equilibrium fee and quantity? Luckily, there's a four-step system that may help us figure it out!
Step 1. Draw a demand and give mannequin representing the main issue earlier than the financial event took situation.
Commencing this mannequin requires 4 common portions of understanding:
The law of demand, which tells us the slope of the demand curve
The law of provide, which gives us the slope of the supply curve
The shift variables for demand
The shift variables for supply.
When you create your demand and supply model, you should use it to search out the preliminary equilibrium values for fee and variety.
Step 2. Decide whether or not the economic event being analyzed influences demand or provide.
In different phrases, does the occasion consult with something within the record of demand reasons or deliver motives?
Step 3. Decide whether or not the result on demand or give causes the curve to shift to the proper or to the left, and sketch the brand new demand or deliver curve on the diagram.
That you may think about it this fashion: Does the occasion alternate the amount consumers wish to buy or the amount producers wish to sell?
Step 4. Establish the brand new equilibrium and then compare the long-established equilibrium rate and number to the brand new equilibrium cost and number.
The first-rate method to get at this system is to take a look at it out a few occasions! Lets first don't forget an instance that includes a shift in deliver, then we'll move on to one that involves a shift famous. Subsequently, we will do not forget an illustration the place each provide and demand shift.