Question

100 The graph shows the market for gum. A fire destroys some factories that produce gum and the quantity of gum supplied decreases by 40 million packs a week at each price. Draw a curve to show the effect of this event. Label it 1. Draw a point to show the new equilibrium price and equilibrium quantity. Label it E. At the same time the fire occurs, there is an increase in the teenage population, which increases the quantity of gum demanded by 40 million packs a week at each price. Draw a curve to show the effect of this event Label it 2. Draw a point to show the new equilibrium price and equilibrium quantity. Label it E. 5 40 .80 120 120 160 200 240

Answer 1

Price (6) So E - -- о 80 120 140 160 200 - Quantity (million) When Fire destroys some factories that produce gum and quantity supplied of gam decreases by yo million packs a week at each price. so supply curve shift Leftward from s tos, New Equilibrium point is El. when at the same time, the demand for gun quereasts when teenage population Increase So Demand curve shift right word. So New Equilibrium is shown by Er. New Equilibrium price is $60 . Quantity is 140 million.