Answer to Question #59472 in Microeconomics for 6688

Question

1. Ceteris Paribus, when the demand for Internet service have increased the government has introduced strict regulations on internet providers, resulting in the decrease in the number of Internet providers, Using demand and supply analysis what will be the impact on price and quantity in the market for Internet services. (Hint : There are 2 scenarios working at the same time)
2. The outbreak of Bird flu in 1997 resulted in the Hong Kong government ordering the culling of more than 1.5millions chickens. The culling of chickens was stimultaneously accompanied by consumers reducing their demand for life chickens due to the bird flu. Using demand and supply analysis, what was the impact on price and quantity in the market for life chickens? (Hint : There are 2 scenarios working at the same time)

Answer 1

1. When the demand for Internet service have increased and the government has introduced strict regulations on internet providers, resulting in the decrease in the number of Internet providers, then the supply decreased, equilibrium price increased and equilibrium quantity decreased.
2. If the culling of chickens was simultaneously accompanied by consumers reducing their demand for life chickens due to the bird flu, then according to decrease in supply and demand equilibrium price decreases, increases or may not change and equilibrium quantity decreases in the market for chickens.