Answer to Question #125689 in Microeconomics for dave

Question

Explain the effect on equilibrium price and quantity of a rise in shipping insurance premiums?

Answer 1

Rise in shipping insurance premiums is is likely to result to a negative effect on labour hence increase on production cost. This will cause a reduction in quantity supplied.

Decrease in quantity supplied makes the equilibrium point shift to the left of supply curve causing an increase in equilibrium price.