Answer to Question #124008 in Macroeconomics for ash

Question

Q3. Given an amount of rs 1000 list the normal goods which you will purchase from this amount. Explain in words how the laws of demand and supply apply to these goods . Assuming that the markets of these goods are competetive, explain in words how changes in supply will impact the market equilibrium if the amount of

rs 1000 promised to you is witheld and you cannot make purchase.

Answer 1

Iron box and a Suit.

Low supply and high demand will increase prices of the commodities, this will to one making a choice on what want to satisfy first and which one will be the forgone alternative.

The supply will be high and the demand will be low this makes the prices of the items decrease.