Question

Explain what happens to supply,price,and quantity when the following conditions occur.

a) A new technology is developed to pick peaches

b) The government allows, more furniture imports from China

c) Interest rates are lowered to help spur the economy

d) The cost of rubber which is used in the manufacturing of tires increases

e) The government imposes a tax in imports of foreign cars increases

Answer 1

a) This effect is called as Supply Shift which moves Supply curve outwards as to meet increase supply for given Price point.

B) Imported goods creates competition for domestic competitiors Supply of furniture will increase which will decrease the price and quantity increase movement along demand curve to match new equilibrium.

C)Interest lowers will boost the new investment As investment increase increases the production and employment which will help to increase output with lower interest rates.

D) Cost of rubber increases will increase the price of tire as this inverse will pass on to end consumers.Price increase decreases the quantity and supply curve shifts inwards.