Answer to Question #198131 in Macroeconomics for Abdul basit

Question

Show in a diagram the effect on the demand curve, the supply curve, the equilibrium price, and the equilibrium quantity of each of the following events.

a). The market for newspapers in your town

Case 1: The salaries of journalists go up.

Case 2: There is a big news event in your town, which is reported in the newspapers.

 

b). The market for St. Louis Rams (a professional football team) cotton T-shirts

Case 1: The Rams win the Super Bowl competition.

Case 2: The price of cotton increases.

 

c). The market for bagels

Case 1: People realize how fattening bagels are.

Case 2: People have less time to make themselves a cooked breakfast.

 

d). The market for the Krugman and Wells economics textbook

Case 1: Your professor makes it required reading for all of his or her students.

Case 2: Printing costs for textbooks are lowered by the use of synthetic paper.

Answer 1

a) The market for newspapers in your town

Case 1: The salaries of journalists go up. The supply will decrease, as a result the equilibrium price will increase, the equilibrium quantity will decrease.

Case 2: There is a big news event in your town, which is reported in the newspapers. The demand will increase, as a result the equilibrium price will increase, the equilibrium quantity will increase.

b) The market for St. Louis Rams (a professional football team) cotton T-shirts

Case 1: The Rams win the Super Bowl competition. The demand will increase, as a result the equilibrium price will increase, the equilibrium quantity will increase.

Case 2: The price of cotton increases. The supply will decrease, as a result the equilibrium price will increase, the equilibrium quantity will decrease.

c) The market for bagels

Case 1: People realize how fattening bagels are. The demand will decrease, as a result the equilibrium price will decrease, the equilibrium quantity will decrease.

Case 2: People have less time to make themselves a cooked breakfast. The demand will increase, as a result the equilibrium price will increase, the equilibrium quantity will increase.

d) The market for the Krugman and Wells economics textbook

Case 1: Your professor makes it required reading for all of his or her students. The demand will increase, as a result the equilibrium price will increase, the equilibrium quantity will increase.

Case 2: Printing costs for textbooks are lowered by the use of synthetic paper. The supply will increase, as a result the equilibrium price will decrease, the equilibrium quantity will increase.