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The market for eggs is at equilibrium. Consider two events that occur simultaneously; Scientists discover that...

The market for eggs is at equilibrium. Consider two events that occur simultaneously; Scientists discover that eating eggs causes cancer and farmers develop new technology to improve egg production. Describe how these two events impact the market for eggs. Be specific about which curve (or curves) shifts and in what direction. What is the happens to the equilibrium price and quantity in the market for eggs?

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Answer #1

When eating eggs causes cancer then demand of eggs in the market falls and this causes leftward shift of demand curve. On the other hand, improvement of technology increases supply of eggs in the market which causes righward shift of supply curve.

When magnitude of increase in supply is equal to the magnitude of decrease in demand then equilibrium quantity will remain same while equilibrium price falls.

When increase in supply > decrease in demand then equilibrium quantity rises and price falls.

When increase in supply < decrease in demand then equilibrium quantity and price both falls.

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