Answer to Question #75857 in Economics for Preann

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

2.2.1 A change in the wages of farm workers from R150 per day to R200 per day will cause a decrease in supply, so the equilibrium price will increase and equilibrium quantity of apples will decrease.
2.2.2 A decrease in the price of fertilizers and a concurrent increase in the demand for apple juice will cause an increase in supply, so the equilibrium price will fall and equilibrium quantity of apples will increase.