For each of the following scenarios, use a supply and demand diagram to illustrate and explain the effect of the given shock on the equilibrium price and quantity in the specified competitive market. Consider the market is initially in equilibrium. Many European countries have suffered a significant drop in tourism due to the severe Coronavirus outbreak. However, airline companies have recently predicted that tourism will increase by the end of the year. On the other hand, multiple airline companies filed for bankruptcy and went out of business during the pandemic. Show the effect that these two changes will have on the market for airline tickets to Europe at the end of this year. PHP Group of Industries are producers of both Steel and Aluminum sheets in Bangladesh. Steel and aluminum are produced in the same factory and they are interchangeably used by consumers. Steel prices in the market surged dramatically during the pandemic. Show the effect of this on the aluminum market.
For each of the following scenarios, use a supply and demand diagram to illustrate and explain the effect of the given shock on the equilibrium price and quantity in the specified competitive market. Consider the market is initially in equilibrium. Many European countries have suffered a significant drop in tourism due to the severe Coronavirus outbreak. However, airline companies have recently predicted that tourism will increase by the end of the year. On the other hand, multiple airline companies filed for bankruptcy and went out of business during the pandemic. Show the effect that these two changes will have on the market for airline tickets to Europe at the end of this year. PHP Group of Industries are producers of both Steel and Aluminum sheets in Bangladesh. Steel and aluminum are produced in the same factory and they are interchangeably used by consumers. Steel prices in the market surged dramatically during the pandemic. Show the effect of this on the aluminum market.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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For each of the following scenarios, use a supply and demand diagram to illustrate and explain the effect of the given shock on the equilibrium price and quantity in the specified competitive market. Consider the market is initially in equilibrium.
Many European countries have suffered a significant drop in tourism due to the severe Coronavirus outbreak. However, airline companies have recently predicted that tourism will increase by the end of the year. On the other hand, multiple airline companies filed for bankruptcy and went out of business during the pandemic. Show the effect that these two changes will have on the market for airline tickets to Europe at the end of this year.
PHP Group of Industries are producers of both Steel and Aluminum sheets in Bangladesh. Steel and aluminum are produced in the same factory and they are interchangeably used by consumers. Steel prices in the market surged dramatically during the pandemic. Show the effect of this on the aluminum market.
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