Answer to Question #120611 in Microeconomics for Ester

Question

Using supply and demand analysis explain the effect of equilibrium price and quantity of the following events on the market of fish
- decrease in freight carried by ship
A rise in shipping insurance premiums
A fall in a real wages paid to ship construction workers
A government subsidy for ship production

Answer 1

A decrease in freight carried by the ship has a resultant decrease in quantity of fish supplied due to decreased shipping.

The decrease in supply leads to an increase in the equilibrium hence shifting the equilibrium to the left in the supply curve.

The prices of fish will increase due to an increase in the quality demanded. The fall in real wages for construction workers and the resultant rise in shipping insurance premiums will have a negative effect on labour hence increasing the cost of production.

The supply of goods decreases causing an increase in equilibrium. An increase in demand causes a rise in the equilibrium price.

Government subsidies for ship production will boost fish supply hence leading to an increase in supply and a fall in equilibrium price. The curve shifts to the right.