Answer to Question #302969 in Macroeconomics for saba

Question

How will each of the following changes in demand and/or supply affect equilibrium price and equilibrium quantity in a competitive market; that is, do price and quantity rise, fall, or remain unchanged, or are the answers indeterminate because they depend on the magnitudes of the shifts? Use supply and demand to verify your answers.

a. Supply decreases and demand is constant.

b. Demand decreases and supply is constant.

c. Supply increases and demand is constant.

d. Demand increases and supply increases.

e. Demand increases and supply is constant.

f. Supply increases and demand decreases.

g. Demand increases and supply decreases.

h. Demand decreases and supply decreases.

Answer 1

a. Supply decreases and demand is constant.

The quantity demanded increases hence making the prices of the commodities rise.

b. Demand decreases and supply is constant.

The market becomes saturated with the supply and the commodities making the prices of commodities fall drastically.

c. Supply increases and demand is constant.

An increase in supply with constant demand will make prices of commodities start falling.

d. Demand increases and supply increases.

When demand increases as the supply increases, there will be the state of equilibrium experienced in demand and supply.

e. Demand increases and supply is constant.

The prices of goods and commodities rise in prices because of the supply shortage.

f. Supply increases and demand decreases.

The market will be saturated with commodities making the prices go down.

g. Demand increases and supply decreases.

The net effect will be an increase in the prices of commodities as supply outweighs demand.

h. Demand decreases and supply decreases

There will be a rise in the prices of commodities in the market.