3. Using demand and supply analysis, graphically illustrate how the equilibrium price andquantity will change under the two following scenarios. Be certain to properly label yourgraphs.a) Market for biogas:Over the past year, the number of houses in one country using bio gas for heatingincreases while the number of companies producing biogas decreases.b) Market for instant noodle (an "inferior" good):Over the past year, the average income in one country rose by 5% while the union ofinstant noodle company leaders managed to gain large wage increases for theirworkers.

Answered: 3. Using demand and supply analysis,…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. Using demand and supply analysis, graphically illustrate how the equilibrium price and
quantity will change under the two following scenarios. Be certain to properly label your
graphs.
a) Market for biogas:
Over the past year, the number of houses in one country using bio gas for heating
increases while the number of companies producing biogas decreases.
b) Market for instant noodle (an "inferior" good):
Over the past year, the average income in one country rose by 5% while the union of
instant noodle company leaders managed to gain large wage increases for their
workers.

Expert Solution

Step 1: Define demand & supply

Demand :

Demand is when a consumer has the desire to buy something at the price that he is ready to pay is called demand.

Supply:

Supply is the total number of goods and services produced by a producer is called supply. Supply depends on demand. It includes the consumer's dependent and independent variables.

The supply curve is a graphical presentation of supply where price and quantity supplied have a positive relation. The supply curve slopes upward from left to right. Demand is a function of price, income, taste, and expectations.

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