In answering the following questions, show whether the event is causing a change (shift or movement) in demand and/or supply and the consequent impact on the equilibrium price and equilibrium quantity.
a. Market for Flowers (Roses): Valentine's Day will definitely have an impact on the market for flowers. Suppose there is also severe frosty weather that affects growing flowers in days leading to Valentine's Day. Due to these events, what happens to the (1) demand for flowers, and (2) supply of flowers, and how will the (3) equilibrium price and (4) equilibrium quantity of flowers change?
b. Market for Ice Cream: Suppose we are in summer and firms that produce ice cream can get sugar, an input in ice cream, at lower price than before. Due to these events, what happens to the (1) demand for ice cream, and (2) supply of ice cream, and how will the (3) equilibrium price and (4) equilibrium quantity of ice cream change?
Homework Answers
ANSWERS :
a.
Demand of flowers will not change.
Supply will shift to left.
Equilibrium price will increase.
Equilibrium quantity decrease.
b.
Demand will shift to the right
Supply will shift to the right
Equilibrium price may decrease or remain same or increase depending upon extent of shifts of demand and supply curves.
Equilibrium quantity will increase.
Add Answer to:
In answering the following questions, show whether the event is causing a change (shift or movement) in demand and/or supply and the consequent impact on the equilibrium price and equilibrium quantity.
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DEMAND. SUPPLY, AND MARKET EQUILIBRIUM KEY TERMS change in demand change in quantity demanded change in quantity supplied change in supply complements demand schedule excess demand (shortage) excess supply (surplus) individual demand curve Individual supply curve Inferior good law of demand law of supply market demand curve market equilibrium market supply curve minimum supply price normal good perfectly competitive market quantity demanded quantity supplied substitutes supply schedule EXERCISES All problems are assignable in MyEconLab The Demand Curve Describe and explain...
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