Question

The costs of labor go up for the sellers of widgets and incomes of buyers go...

  1. The costs of labor go up for the sellers of widgets and incomes of buyers go up for buyers of widgets. (Widgets are inferior goods.) What happens to market supply and demand? What happens to the equilibrium price and quantity?
Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer : If labor cost increase then the production of widgets will decrease. As a result, market supply will decrease which will shift the market supply curve to leftward.

For inferior goods if consumers' income increase then demand decrease. Here widget is an inferior good and the income of consumers has increased. As a result, the market demand for widgets will decrease which will shift the market demand curve to leftward.

Now due to decrease in both supply and demand at new equilibrium the quantity will decrease but the price will be uncertain. Because changes in price totally depends on how much market demand and supply changes. So, in this situation price may increase, decrease or may stay same.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. Suppose the incomes of buyers in a market for a particular normal good decrease. Draw...
1. Suppose the incomes of buyers in a market for a particular normal good decrease. Draw demand and supply curves and show what will happen to the new equilibrium price and quantity. Will they increase or decrease? 2. Suppose there is a reduction in input prices. Draw demand and supply curves and show what will happen to the new equilibrium price and quantity. Will they increase or decrease? 3. Suppose the incomes of buyers in a market for a particular...
1. Suppose the U.S. economy moves out of a recession and incomes rise. What will happen...
1. Suppose the U.S. economy moves out of a recession and incomes rise. What will happen to the equilibrium prices and quantities of normal goods? If price stays the same would that be equilibrium? Why or why not? What will eventually happen in the market? What happens to equilibrium price and quantity? Which quantity is affected and how do you know? Would your answer be the same if you were discussing inferior goods? Explain using supply/demand graphs. 2. Draw a...
[5] One reason buyers demand less of a product as its price increases is: A) substitute...
[5] One reason buyers demand less of a product as its price increases is: A) substitute goods are usually available. B) high-priced goods place buyers in higher tax brackets. C) buyers must save more of their incomes as prices increase. D) sellers offer less of the product for sale as its price increases. [6] Which of the following explains why consumers purchase less of a good or service when its price increases? A) A limited income from which purchases can...
In a market with numerous sellers and buyers demand is given by p=240-8q and supply is...
In a market with numerous sellers and buyers demand is given by p=240-8q and supply is p=4+12q. 1. Find the equilibrium price and quantity. 2. Mathematically find the values for consumer and producer surplus. 3. What is the deadweight loss in this market? 4. Suppose instead a monopolist served these same buyers, and the monopolist had marginal cost curve 4+12q. a. Show graphically the consumer surplus that consumers have lost due to monopoly. b. Consumer surplus is lower for two...
In the market for widgets, the supply curve is the typical upward-sloping straight line, and the...
In the market for widgets, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping straight line. The equilibrium quantity in the market for widgets is 200 per month when there is no tax. Then a tax of $5 per widget is imposed. The price paid by buyers increases by $2 and the after-tax price received by sellers falls by $3. The government is able to raise $750 per month in revenue from...
In the market for hot dogs, what happens when the price of beef goes up and...
In the market for hot dogs, what happens when the price of beef goes up and the price of hot dog buns goes up? [hot dogs are made of beef. Also, the term "hot dog" here refers to just the sausage. So you buy hot dogs at the store. And you also buy "hot dog buns" at the store. This gets confusing for some people, especially non-native English speakers] What happens to supply and demand in the market for hot...
Complete the following table. Table: The Costs of Antibiotics Quantity of Antibiotics Marginal Benefit to Buyers...
Complete the following table. Table: The Costs of Antibiotics Quantity of Antibiotics Marginal Benefit to Buyers Marginal Cost to Sellers External Cost Marginal Social Benefit 1 25 5 10 2 20 10 10 3 15 15 10 4 10 20 10 5 5 25 10 What is the market equilibrium quantity and what is the efficient equilibrium quantity? Market Quantity: Efficient Equilibrium Quantity: What is the socially efficient quantity/price? What is the price a consumer’s insurance will pay and how...
Jackie is managing a company in an industry with many buyers and sellers, no externalities, and...
Jackie is managing a company in an industry with many buyers and sellers, no externalities, and free entry and exit. However, the different companies in the industry produce goods of different qualities and these qualities are costly for consumers to observe before purchase. Consumers do value the higher quality goods more highly. Relative to a market with homogeneous goods and perfect information, what should Jackie expect to be true about price and profitability in her industry? How does the magnitude...
Jackie is managing a company in an industry with many buyers and sellers, no externalities, and...
Jackie is managing a company in an industry with many buyers and sellers, no externalities, and free entry and exit. However, the different companies in the industry produce goods of different qualities and these qualities are costly for consumers to observe before purchase. Consumers do value the higher quality goods more highly. Relative to a market with homogeneous goods and perfect information, what should Jackie expect to be true about price and profitability in her industry? How does the magnitude...
Suppose the price of milk increases and at the same time, the incomes of cheese buyers...
Suppose the price of milk increases and at the same time, the incomes of cheese buyers decrease. Milk is an input in the production of cheese. In addition, we also know that cheese is a normal good. As a result, in the market for cheese Group of answer choices 1.the equilibrium quantity rises and the equilibrium price may increase, decrease, or stay the same. 2.the equilibrium price rises and the equilibrium quantity may increase, decrease, or stay the same. 3.the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT