Question

The following table shows the demand and supply of backpacks made by a Melbourne designer whose...

  1. The following table shows the demand and supply of backpacks made by a Melbourne designer whose products sell exclusively to a youth market.  Graph both the demand and supply curves and label the equilibrium price and quantity.  

Price of Backpack ($)

Quantity demanded per year

Quantity supplied per year

200

1100

2500

180

1200

2200

160

1400

1900

140

1600

1600

120

1800

1400

100

2000

1000

Now assume that a famous celebrity starts wearing the backpack everywhere, making it very popular with young people.  Young people are now willing to purchase 500 more backpacks per year at every price.  Show this change on your graph and explain what has happened to equilibrium price and quantity as a result.

quantity as a result.

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