Question

Show on a supply and demand graph the impact of the following on the equilibrium price (P*) and quantity (Q*) in the market for Dell laptops. [You will be asked to upload your graphs at the end. The price of Microsoft laptops increases for consumers and at the same time Dell is mandated by law to increase wages of its workers. [Select] Shift in demand .What factor caused the shift? [Select] [Select] Shift in supply What factor caused the shift? [Select] Effect on equilibrium price? ISelect] Effect on equilibrium quantity? Select)

Answer 1

Microsoft laptops are substitutes for Dell laptops. Higher price for Microsoft laptops will discourage its sales and consumers will switch to the market for Dell laptops. Here the demand increases and so demand curve shifts to the right

Workers are being higher nominal wages with the new mandate. This raises cost of production and so the quantity supplied of Dell laptops is likely to decrease. Here the supply decreases and so supply curve shifts to the left

Together these events will cause the price to rise but we cannot say what happens to the quantity , it can increase decrease or remain unchanged

Shift in demand [Select] Right wards What factor caused the shift? [Select] Increased price of substitutes Shift in supply [Select] Leftwards .What factor caused the shift? [Select] Increased input price / cost ISelect] Increases Effect on equilibrium price? Effect on equilibrium quantity? [Select] Ambiguous

Price ($) S'S Supply SS F P1 PO E D'D Demand DD Quantity