Q.1 Suppose the demand and supply curves of good-X are given in Figure 1 below.Note: Answer the questions given below using Figure 1 (draw separate diagram for eachquestion and you may attach picture of the diagram in the word document):Figure 1What will happen to the equilibrium priceSupplyand equilibrium quantity ifEquilibriuma. Consumers' income increases and goodX is normal.b. Price of complement good of X increases.Demand(D)c. The cost of inputs used in the productionof X increases.Quantityd. Both consumers' income increases (good X in inferior) and the technologicaladvancement reduces the cost of production of good X.Price ($)

Increase in consumer income increases demand, shifting demand curve rightward to D1 which intersects…

Figure 1 What will happen to the equilibrium price Supply (5) and equilibrium quantity if: Equilibrlum a. Consumers' income increases and good X is normal. b. Price of complement good of X increases. Demand (D) c. The cost of inputs used in the production of X increases. Quantity, d. Both consumers' income increases (good X in inferior) and the technological advancement reduces the cost of production of good X. Price ($)

Figure 1 What will happen to the equilibrium price Supply (5) and equilibrium quantity if: Equilibrlum a. Consumers' income increases and good X is normal. b. Price of complement good of X increases. Demand (D) c. The cost of inputs used in the production of X increases. Quantity, d. Both consumers' income increases (good X in inferior) and the technological advancement reduces the cost of production of good X. Price ($)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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