Question

Using well labelled diagrams, explain how the equilibrium price and equilibrium quantity of apples will change as a result of the following;
2.2.1 A change in the wages of farm workers from R150 per day to R200 per day. (10)
2.2.2 A decrease in the price of fertilizers and a concurrent increase in the demand for apple juice. (10)

Answer 1

Question #75191, Economics / Microeconomics

2.2.1 Due to growth of wages of farm workers, the equilibrium price of apples will rise and the equilibrium quantity will decrease.

2.2.2 A decrease in price of fertilizers will result in downward shift of the supply curve. At the same time the increase in the demand for apple juice will result in the upward shift of the demand curve. As we can see in the diagram, the equilibrium quantity will increase and the equilibrium price will not change.

2.2.1

2.2.2

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