Question

Given the products below and the events that affect them, indicate what happens to demand, supply, equilibrium quantity, and equilibrium price in a competitive market. Identify the determinant of demand and supply that causes the shiftsand illustrate the changes graphically.

(a)Home heating oil. There is a severe winter in the regions using the oil; the cost of a barrel of oil rises for producers of home heating oil.

(b)Organic foods. People become more concerned about chemical additives in food; traditional farms are switching tomore organic methods.

(c)Film cameras. The price of digital cameras falls for consumers; there is a decline in the number of stores selling film cameras.

(d)Bread. Many consumers adopt a low carbohydrate diet and avoid bread products; the price of flour falls for bread producers.

Answer 1

A.Due to severe winter demand for heating oil rises.Due to rise in cost per barrel,the supply falls.

2.People demand more organic due because they are concerned about chemical additives.Demand rises.Supply also rises because farmers switch to organic farming.So the total supply rises.

3.Digital cameras are a substitute of film cameras.When price of digital camera falls,the demand for film camera falls.Supply also falls because because of the fall in the number of stores selling the camera.

4.Demand falls as consumers avoid bread products.Supply rises because price of flour which is used in the production of bread rises.

P1 is the original price.P2 is the new price.

I've market the shifts and final change by arrows.

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