Question

Take a simultaneous decrease in supply and demand curves and discuss what happens to the price and quantity now. Be thorough in your explanations. Use graphs to help illustrate your answer.

Answer #1

When supply decreases, supply curve shifts leftward, increasing price and decreasing quantity. At the same time, when demand decreases, demand curve shifts leftward, decreasing both price and quantity. As a result, quantity definitely decreases. But net effect on price is indeterminate. Price may increase, decrease or remain unchanged based on relative magnitude of shifts in demand and supply curves.

In following graph, D0 & S0 are initial demand & supply curves intersecting at point A with price P0 and quantity Q0. As demand decreases, D0 shifts leftward to D1 and as supply decreases, S0 shifts leftward to S1, intersecting D1 at point B with lower quantity Q1. Since leftward shift in demand curve is more than the leftward shift in supply curve, price is lower at P1.

Consider a simultaneous shift of both the demand curve and the
supply curve.
Before the shift, the market equilibrium is at a point where the
price is 6 and the quantity is 25. Also, before the shift, with
each additional unit increase in price, the quantity supplied
increases by 5 and the quantity demanded decreases by 5.
Now, due to a change in some government policy, the demand
increases by 10 at all price levels. At the same time, the...

8. Assume there is a simultaneous increase in demand and a
decrease in supply. The result of this will be a definite increase
in the equilibrium price but an uncertain impact on the equilibrium
quantity.
True or False

Given supply, if Demand decreases, what happens to equilibrium
price and output sales?
If the decrease in Demand is larger than increase in Supply,
what happens to equilibrium price and output sales?

Discuss what happens to the equilibrium price and quantity of
Colgate Toothpaste when there is a decrease in the supply of
Colgate Toothpaste but no change in the demand. What could cause a
decrease in the supply of Colgate Toothpaste but no change in
demand?

When the expected future price of a good falls, the supply curve
shifts to the right and the demand curve shifts to the left
simultaneously. What happens to the equilibrium price after the
shifts? What happens to the equilibrium quantity after the shifts?
Is it always possible to determine the direction of change in both
the equilibrium price and quantity or is more information
necessary? Use supply and demand curves to graphically illustrate
your answer
7.0.3

Suppose the demand and supply curves for a large specialty
pizza are given by:
Qd = 120 – 10P
Qs = -30 + 5P.
Using the demand and supply functions above, the equilibrium
price of a pizza is ____, and the equilibrium quantity is ____.
Illustrate your answer.
Compute Price elasticity of demand and supply at this
equilibrium.
Compute CS and PS and illustrate on a graph.
Suppose that the government decrees that a specialty cannot be
sold above $8....

Table:
An Increase in Supply
A Decrease in Supply
An Increase in Demand
A
B
A Decrease in Demand
C
D
Refer to the Table above:
Which combination would produce an increase in equilibrium price
and an indeterminate change in equilibrium quantity?
Note: Start with a demand and supply curves and identify the
initial equilibrium price and quantity. Then, change the demand and
supply curves (indicated in the table) proportionally and identify
the new equilibrium price and quantity. In some...

For each of the following, draw demand and supply curves for
cars to illustrate what happens to the market equilibrium when:
a) a per-unit tax of $10,000 is placed on cars.
b) the government commits to zero emissions in 2030, earlier
than the market expected.
c) half of the sellers in the market decide to stop making
cars
d) a large proportion of consumers decide to sell their cars and
not buy a new ones.
Include an explanation for your...

Consider a US market where there is no international
trade. Draw the US demand and supply curves and indicate
the equilibrium price and quantity exchanged. Now
suppose that the world price for this good is above
the market equilibrium price in the
US. Describe what happens in this case if international
trade is permitted. Be sure in your answer to
explain each of the following:
What happens to the price, level of domestic production,
imports or exports, and quantity exchanged in the US.
Who,...

Question 1. A. What happens to the equilibrium price and
quantity of hamburgers when the price of tacos, a substitute,
falls? How have the supply and demand curves for hamburgers
shifted? Draw a graph showing these shifts.
B. What happens to the equilibrium price and quantity of
hamburgers when the price of cattle feed increases? How have the
supply and demand curves for hamburgers shifted? Draw a graph
showing these shifts.
C. What happens to the equilibrium price and quantity...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 3 minutes ago

asked 4 minutes ago

asked 14 minutes ago

asked 14 minutes ago

asked 17 minutes ago

asked 25 minutes ago

asked 27 minutes ago

asked 34 minutes ago

asked 34 minutes ago

asked 34 minutes ago

asked 35 minutes ago

asked 40 minutes ago