Question

Question 13 12 pts Supply and Demand: Upload a file (probably a picture of the piece of paper with your work on it) that answers the following question. Assume that we start in equilibrium and end in equilibrium. PROBLEM: Assume that milk and fertilizer are complements in production. If the price of fertilizer rises, what will happen in the market for milk? Your answer must include: 1. A graph that shows where the market started before the change and where it ended up after the change. Label the graph completely. 2. What happens to the equilibrium price for the product. 3. What happens to the equilibrium quantity for the product. 4. A brief explanation in words for why the market changes this way. Upload Choose a File 80 DOO DOO II F4 FS 56 F7 F8 A $ 4 % 5 & 7 6 8 9 T С C

Answer 1

13) Given : Milk and fertilizer are complements in production. Market for milk is shown in the diagram below:

Price of milk Supply of milk P P New Demand Demand for milk Quantity of milk Q' Q

1. Initially, equilibrium price and quantity are P and Q respectively. With rise in prise of fertilizers, demand curve for milk shifts to the left as shown above.

2. Equilibrium price of milk will fall from P to P'.

3. Equilibrium quantity of milk will fall from Q to Q'.

4. Here, milk and fertilizer are complements in production. If price of fertilizer rises, quantity demanded for fertilizer decreases. Now, milk being a complement, demand for milks will decrease as well. As a result, demand curve for milk will shift to the left. This will decrease both equilibrium price and quantity of milk.

14) Market of yo-yos is shown in the diagram below:

Price of yo-yos Supply P P New Demand Demand Quantity of yo-yos Q' Q

1. Initially, equilibrium price and quantity are P and Q respectively. If yo-yos become less popular, demand curve for yo-yos will shift to the left as shown above.

2. Equilibrium price of yo-yos will fall from P to P'.

3. Equilibrium quantity of yo-yos will fall from Q to Q'.

4. If yo-yos become less popular, demand for yo-yos will decrease. As a result, demand curve for yo-yos will shift to the left (without any change in its supply). This will decrease both equilibrium price and quantity of yo-yos. In order to check its price, sellers may decrease its supply as well.