Answer to Question #66210 in Economics of Enterprise for leslie

Question

Use the Hill Method for each of the following questions:
1. A new toy store opens. What happens to the price and quantity of toys?
2. A new machine is invented to produce toys faster. What happens to the price and Quantity of toys?
3. A new toy store opens and at the same time people start preferring toys to candy. What happens to the price and quantity of toys?

Answer 1

1. A new toy store opens. The supply rises, so the price decreases and quantity of toys increases.
2. A new machine is invented to produce toys faster. The supply rises, so the price decreases and quantity of toys increases.
3. A new toy store opens and at the same time people start preferring toys to candy. Both demand and supply rise, so the change in price can't be determined without additional information and quantity of toys increases.