Answered: Carefully explain what is happening in…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Carefully explain what is happening in the following markets. Indicate the impact if any on demand, supply, price and quantity.

A new discovery in computer manufacturing has made computer production cheaper. Also, the popularity and usefulness of computers continues to grow.

Impact on demand: _________________

Impact on supply: _________________

Impact on price: __________________

Impact on quantity: ________________

USE THE OPTIONS BELOW TO FILL IN THE BLANK SPACES:

Excess demand
Change in price is uncertain
Change in quantity is uncertain
Increase equilibrium
Increase towards equilibrium
Decrease equilibrium quantity
Decrease equilibrium price
No impact
Shift outwards/to right
Increase equilibrium quantity
Shift inwards/to left
Decrease towards equilibrium
Excess Supply

Expert Solution

Step 1: Define key term:

Excess Demand: Occurs when the quantity demanded in a market exceeds the quantity supplied at the current price, potentially leading to upward pressure on prices.

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