Question

** You will need to draw graphs for this homework. You can do them on the computer with a drawing program if you wish. You may also simply draw them out by hand, properly labeled, and then take a picture and upload the file. If you have trouble ask for help. **

1.    Explain the difference between a change in Demand and a change in the Quantity demanded.
2.    Graph and explain the impact on the market demand for electric cars if the price of oil increases 45%
3. Graph and explain the impact to the market supply of corn of an extremely hot summer. Hint: corn crops do not do well in high temperatures.
4. Graph and explain the impact to the market supply of solar panels when the government provides a subsidy to solar panel producers.
5. Assume farmer could either grow soybeans OR sugar beets on their land. What would happen to the market supply of sugar beets if the market price of soybeans increased by 20%? Graph and explain.
6. Graph and explain why prices above equilibrium are unstable.
7. Graph and explain the impact to the market equilibrium price and quantity of lemons if a new technology is developed to make harvesting more efficient.

Answer 1

Change in Demand and change in Quantilj Demanded: Demand for a goods ode depends depends on on failor faclore like - 75 oon price, income price of other related goods, foolis and preference, ite. We divide these fait ho n factor own price and other factors. i BD = f (P) so Rice Co is treated as variable and other factors like pornce, income dance and preferences, etc. are treated as parameters stens Paribus, 28 demand changes due to change in its own pricesh then it is called change in quantito demanded. And it is represented by poft lalong the curre. (rig.1) Yanvendt . L P1 Bit (Fig.3) If demand changes ue to change in other factors keeping once Rame then it is called change in deneand, and it is shown by alift of demand curre. Cfig. 2) increase 3 oil price increase then demand for stre electric as they are substitutes to disel cars whose demand goes down. The demand curre will stift beff. right. Plex • 6 Since sophes do not do well in buat cum high temperature so the supply will all in hot summer supply cure shift left 6 If gort provides incentive by subsidising solar panel produces then supply will increase and supply couve shift night, ② ff price of soybeaus increase then producers en will increase soybean production and reduce t sugar beets production. so supply cause for seegon beets shift up,

o consida a price P above the equilibrium level. Then at Po, quankly aeneanded is &, and quantity supplied is 82. So there will be an excen supply of goods. So, producers will decrease in price in order to sell the goods. Hence, it is unstable. If new technology increases the efficiency of lemon production then supply will increme. Menu, price will fall and quantity will increane at equilibrium.