Answer to Question #260350 in Microeconomics for Jade

Question

Suppose that the citizens of a country are advised by the Health Authorities on the health benefits of consuming fresh ginger.

Demonstrate and explain, using a clearly labelled diagram, the effect of this information on the equilibrium price and equilibrium quantity of fresh ginger.

Answer 1

The advice by health authorities will incease demand for freshginger The buyers want to buy a larger quantity of the commodity at each price point than they did previously. At every price point, the quantity requested is higher than previously. The demand curve shifts to the right on the graph. When demand rises, both the equilibrium price and the equilibrium quantity rise as well.