Question

Please show on a graph how the following events impact demand or supply curve. Please indicate how P and Q will change as a result of these changes.

Market for lemonade: on a hot summer day more people wanted to buy lemonade to quench their thirst

Market for lemonade: the price of coconut water decreased significantly on a hot summer day, while the price of lemonade stayed the same.

Market for teapots: suppose Grace and Tea company is outsourcing production of beautiful teapots to China. Recently on the news you learn that wages of workers in China are rising and now Grace and Tea company will have to pay higher wages to workers in China.

Market for textiles: Suppose you have your own company and create gorgeous textiles that have been featured in the latest pages of Vogue. You decided to implement the latest artificial intelligence (AI) in your production to improve efficiency of the process and quality of your products.

Answer 1

1) We se that the demand increase due to quench for thirst hence the demand curve moves upward and so the price and quantitity equlibrium changes. The diagram is shown below.

2) We see that the subsitutte good that is coconut water price decrease so people will demand more of thta, hence the demand for lemonade will decrease so the demand curve moves downward. and the effect is shown in the diagram.

3) In this we see that the wages increase so the cost of production increase whch will decrease the supply so the supply curve moves leftward and the effect is shown in the diagram.

4) We see that AI has improved the effeciency to produce so the supply will increase and shifting it to righ side.