Question

or each scenario below, draw a graph of the market, property labeled, with the original equilbrium marked as A. Show on the graph the proper shift and maurk the new equiläbrium as point B. State what happess to the equilibrium price and quantity Price A. Increase in demand Supply C. Increase in supply Pr SwPe'y Decrease in demand D. Decrease in supply demon』 ense in Ju Decrcese in Suep Which graph illustrates the following scenarios? What happens in the market for blue jeans when the price of cotton increases? What happens in the market for gourmet piza when consumer incomes increase? What happens in the market for Chevy pickups when the price of Ford F-150s increases? What happens in the market for milk when the price of hay decreases? What happens in the market for yachts when a new luxury tax is imposed on yacht producers? 2. B. c D A. B. CD 6. What happens in the market for fast food burgers when the minimum wage increases? 7. What happens in the market for ice cream when the price of hot fudge decreases? 8. What happens in the market for Spam when consumer incomes increase?

Answer 1

1. D ( INCREASE IN INPUT COST DECREASES THE SUPPLY)

2.A (INCOME EFFECT WILL INCREASE DEMAND)

3.A ( SUBSTITUTE GOOD PRICE INCREASE HAS A POSITIVE IMPACT ON DEMAND OF GOOD)

4.C (SUPPLY SIDE COST DECREASES THUS SUPPLY INCREASES)

5.B (TAX WILL DECREASE DEMAND)

6.A (INCOME EFFECT WILL INCREASE DEMAND)

7.A (DECREASE IN PRICE OF COMPLEMENTARY GOOD INCREASES THE DEMAND FOR GOOD)

8.A (INCOME EFFECT WILL INCREASE DEMAND)