a) Draw a clearly labeled supply-demand diagram for the market, showing the initial equilibrium price and quantity (indicated with P,*, Q.* on the P and Q axes respectively.) b) Does the event shift the supply curve or the demand curve (it will only shift one of the curves.) In what direction? Explain why. c) On the same graph as in part (a) show the shift in the curve that you described in part (b) above. Show the new equilibrium price and quantity resulting from this shift (indicated with P,*, Q,* n the P and Q axes respectively.) d) Explain what the supply and demand model indicates will happen to equilibrium price and quantity in this market due to the event you described. Does this make sense based on what you know from living in markets your whole life? 1. Market: Commercial office space (Q is square footage of rental office space, P is $ per sq footage rent.) Event: The extensive work-from-home necessitated by COVID-19 makes businesses realize that many employees can be just as productive from home and they don't need to require people to be in the office always, or even often.
a) Draw a clearly labeled supply-demand diagram for the market, showing the initial equilibrium price and quantity (indicated with P,*, Q.* on the P and Q axes respectively.) b) Does the event shift the supply curve or the demand curve (it will only shift one of the curves.) In what direction? Explain why. c) On the same graph as in part (a) show the shift in the curve that you described in part (b) above. Show the new equilibrium price and quantity resulting from this shift (indicated with P,*, Q,* n the P and Q axes respectively.) d) Explain what the supply and demand model indicates will happen to equilibrium price and quantity in this market due to the event you described. Does this make sense based on what you know from living in markets your whole life? 1. Market: Commercial office space (Q is square footage of rental office space, P is $ per sq footage rent.) Event: The extensive work-from-home necessitated by COVID-19 makes businesses realize that many employees can be just as productive from home and they don't need to require people to be in the office always, or even often.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:8:36
( +92 349 3322246 A%26A3+ECON53...
Applications and Analysis #3
ECON 53 – Intro Microeconomics
Answer all questions with full explanations and clear, neatly
drawn, graphs where requested. You should type the verbal part
of your answers. For graphs, you can draw them on the
computer if you're comfortable with that, or if you have a table
that allows you to draw by hand. Otherwise, you can draw the
graphs by hand and then take picture and insert it in your
problem set in the appropriate place (or at the end), or you can
scan your entire problem set, including drawings, into one PDF.
For questions 1&2, draw one graph of the market indicated for
each question and explain and illustrate the effect on the market
of the event described, by completing parts a-d below for each
question.
a) Draw a clearly labeled supply-demand diagram for the
market, showing the initial equilibrium
price and quantity (indicated with P*, Q* on the P and
Q axes respectively.)
b) Does the event shift the supply curve or the demand
curve (it will only shift one of the curves.)
In what direction? Explain why.
c) On the same graph as in part (a) show the shift in the
curve that you described in part (b) above.
Show the new equilibrium price and quantity resulting
from this shift (indicated with P,*, Q* n
the P and Q axes respectively.)
d) Explain what the supply and demand model indicates
will happen to equilibrium price and
quantity in this market due to the event you described.
Does this make sense based on what you
know from living in markets your whole life?
1. Market: Commercial office space (Q is square footage of
rental office space, P is $ per sq footage rent.)
Event:
The extensive work-from-home necessitated by
COVID-19 makes businesses realize that
many employees can be just as productive from
home and they don't need to require people
to be in the office always, or even often.
2. Market: Automobiles
Event:
Increase in steel tariffs, as we saw in 2018, raises
the price of steel used to make cars.
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