1. Explain what is happening in the following market below. Indicate the impact if any on
Answer
the price of the inputs of production have increased and this means the supply decreases as a result of which the supply curve shifts to the left and this increases the equilibrium price and decreases the equilibrium quantity.
Because the brand has been favoured in the past four market periods, the demand increases as a result of which the demand curve shift to the right and this increases the equilibrium price and quantity and in both the cases the equilibrium prices increasing which is why the equilibrium price ultimately increases but the quantity decreases in one case and increases in other as a result of which the change in quantity is actually uncertain on the whole.
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