Answer questions 4, and 5 from Table 1 Table 1: Quantity demanded and supplied for the “Boost Juice” Price ($) Quantity Demanded Quantity Supplied 4 2,000 1,500 6 1,600 1,600 8 1,200 1,700 10 800 1,800 12 400 1,900 14 0 2,000 4. Draw the demand and supply curves for “Boost Juice”. What are the equilibrium price and quantity of drinks? Explain why this is the equilibrium point. Label all axis and curves. 5. Explain, using the graph in question 4 above, what would happen if the price was initially $4? Identify any surplus or shortage on the graph above. Label all axis and curves.
Answer questions 4, and 5 from Table 1
Table 1: Quantity demanded and supplied for the “Boost Juice”
|
Price ($) |
Quantity Demanded |
Quantity Supplied |
|
4 |
2,000 |
1,500 |
|
6 |
1,600 |
1,600 |
|
8 |
1,200 |
1,700 |
|
10 |
800 |
1,800 |
|
12 |
400 |
1,900 |
|
14 |
0 |
2,000 |
4. Draw the demand and supply curves for “Boost Juice”. What are the
5. Explain, using the graph in question 4 above, what would happen if the price was initially $4? Identify any surplus or shortage on the graph above. Label all axis and curves.
6. A student writes the following: “In the past 15 years, technological advancements have led to an increase in the production of computers. This causes the price of computers to fall. As a result, demands for computers have risen since more people can now afford to buy computers”. Is this analysis true or false? Explain.
Question 2
Hashtags such as “toiletpaperapocalypse”, “toiletpapergate”, etc were trending on Twitter in Australia in early March 2020. Such trends occurred as a significant number of Australians rushed to panic-buying toilet papers amid fears of the Corona-virus outbreak. When asked, many shoppers said they wanted to stockpile in case the virus was to spread across the community.
- Draw appropriate supply & demand graph(s) to illustrate the effects of the above shock on the market for toilet papers in Australia. In your own words, explain which curve(s) would shift and the reason behind the shift.
- Comment clearly on the changes in price and quantity of toilet papers in Australia following the shock above.
- Supermarkets have vowed not to increase the price of toilet papers. At the same time, they have moved to limit purchases to 4 packs per customer. What would happen to the market of toilet papers following the above policies by supermarkets? Suppose now toilet papers could be imported into Australia in unlimited quantities at a low cost. How would this change the situation? Draw appropriate graph(s) to illustrate your answer.
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