Question

) Draw a supply and demand graph that gives you the result stated in 5a and 5b. Based on the information in each statement, you should shift either the demand or the supply curve, and show that shift on the graph. Then, you must write a statement about the elasticity of the other curve (the curve that does not shift), which gives you the indicated result. Label the graph carefully, including the axes. Label the initial supply curve S1 and the initial demand curve D1. Use “2” to label the curve that shifts (D2 or S2). (In conclusion: to get points you must draw the correct curves in the graph. Then you will need an explanation that says what has to be true about the price elasticity of the curve that did not shift that is consistent with the result asked for in 5a and 5b.) a). (5 points) A decrease in the demand for good A will not change the equilibrium price. (3 points for the correct graphs and 2 for the explanation)

Answer 1