Answer to Question #188056 in Microeconomics for Sonu Malik

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.

1. Tribune’s market in your city

a. Rise in wages of reporters.

b. Tribune published a ground breaking story happened in your city.

2. The market for Borjan shoes.

a. Aisam-ul-Haq won the New York open and is the ambassador of Borjan.

b. Raw leather price rises.

3. The market for donuts

a. Realization about donuts causing obesity.

b. Less time for working class to make breakfast.

4. The market for the Wren and Martin workbook

a. Teacher making it mandatory for every student to practice.

b. Paperback editions making printing costs cheaper for books.

Answer 1

QUESTION 1.

a) A rise in the wages of reporters causes the cost of production to go up. The supply curve will shift to the left(decreases), the quantity falls while the equilibrium price rise.

b) The Tribune would be in higher demand as a result of the groundbreaking news. The demand curve begins to slant toward the right. Both the price and quantity of the equilibrium will increase.

QUESTION 2.

a) There will be an increase in demand for Borjon shoes. The demand curve begins to shift to the right. Both the price and quantity of the equilibrium will increase.

b) The cost of production rises as the price of raw leather rises. The supply curve shifts to the left (decreases), resulting in an increase in equilibrium price and a decrease in quantity.

QUESTION 3.

a) The equilibrium price and quantity for donuts will drop as the demand curve shifts to the left (decreases).

b) The equilibrium price and quantity for donuts will rise as the demand curve shifts to the right (increases).

QUESTION 4.

a) The demand will rise. The demand curve begins to shift to the right. Both the equilibrium price and quantity will increase.

b) The supply curve shifts to the right ( increases). The equilibrium price falls and quantity rises.

Diagram presentations are shown below.

1 a) Market for the tribune.

b)

2 Market for Borjon shoes.

a)

b)

3 Market for donuts.

a)

b)

4 Market for Wren and Martin.

a)

b)