Answer to Question #190404 in Microeconomics for Arwah Bashir

Question

with the help of graphs show how the following changes are going to affect the market equilibrium . considering the shifting factors of gul ahmed clothing demand (a) the consumer is promoted; now earning better salary than before (b) J. clothing brand announces the 70 % off sale on their entire stock for unlimited time period. (c) a news channel announces that EID is expected to be on thursdayin coming week (d) with an increase in global connectivity , now consumers are more inclined towards western clothing

Answer 1

Solution:

a.). The consumer is promoted; now earning better salary than before – Gul Ahmed clothing demand will increase due to an increase in consumer income. The gul Ahmed clothing is elastic demand since it is a normal good, so when the consumer's income increase, they can be able to afford them, increasing Ahmed clothing demand. The market equilibrium price will increase and the market equilibrium quantity will also increase.

This is depicted by the below graph:

b.). J. clothing brand announces the 70% off sale on their entire stock for unlimited time period – The J. clothing brand demand will increase during the unlimited time period of their 70% off sale on their stock. This is because the 70% off sale will lower its prices making J.'s clothing brand available to many consumers. J. clothing brand is a normal product whose demand is elastic, and a decrease in its prices will increase its demand for the brand and an increase in the supply of the product to the market. The market equilibrium price will decrease and an increase in market equilibrium quantity.

This is depicted by the below graph:

c.). A news channel announces that EID is expected to be on Thursday in the coming week – EID is a Muslim festivity that will increase the demand for most products and services during the celebrations, pushing the prices of those products and services up. The quantity supplied for the same products will also increase. Therefore, the market equilibrium price and quantity will increase. 

This is depicted as follows:

d.). With an increase in global connectivity, now consumers are more inclined towards western clothing – This will increase the demand for western cloth by home country consumers, resulting in an increase in western cloth prices. The market equilibrium price and quantity will increase.

This is depicted by the below graph: