Question

Show on a supply and demand graph the impact of the following on the equilibrium price (P') and quantity (Q*) in the market for Dell laptops. [You will be asked to upload your graphs at the end.) The price of Microsoft laptops increases for consumers and at the same time Dell is mandated by law to increase wages of its workers. Shift in demand (Select] '. What factor caused the shift? [Select ] Shift in supply [Select] '. What factor caused the shift? [Select) Effect on equilibrium price? Select] Effect on equilibrium quantity? (Select]

Answer 1

Microsoft laptops and Dell laptops are substitute goods.

● So rise in price of microsoft laptops will lead to a rise in demand for Dell laptops. Demand rises and shifts rightwards.

● Rise in wages leads to rise in cost of production, supply curve falls and shifts leftward.

◆ shift in demand= RIGHTWARDS

Factor= price of substitute goods

◆ shift in supply= LEFTWARDS

Factor= cost of production

◆ Equilibrium price= INCREASES

◆ Equilibrium Quantity= AMBIGOUS

When Demand rises and supply falls, equilibrium price rises. But the change in quantity depends on the intensity of demand and supply shift. Equilibrium Quantity can rise, fall or remain unchanged. So there are three possibilities.

SUPPLY DECREASES DEMAND INCREASES CTHERE ARE 3 POSSIBILITIES) o vs AD ..pa & SCTD .PT :.Q s三个D :.PT ..qunchanged. :.Q