For questions 5 I need to know if input prices will rise or fall For questions 6 i need to a explanation of the sellers behavior. Law of demand states that quantity demanded is related to price **Question Set:**(a) State one thing that would cause market supply to increase (cause the supply curve to shift to the right).(b) If supply were to increase, would equilibrium price increase or decrease?(c) If supply were to increase, would equilibrium quantity increase or decrease?**Answers:**(A) Input price.(B) Increased supply will cause the equilibrium price to fall.(C) Excess supply will cause the equilibrium price to fall, and quantity will increase. **How Firms React to Shortages in the Market****Firms will react to a shortage (excess demand) by __________ prices. Why will they do this?**Firms typically respond to shortages by increasing prices to reduce demand and bring prices back to an equilibrium level. In any market, when the demand for a product is high, firms tend to increase its price. This behavior aligns with the law of demand, which states that as demand increases, prices are likely to rise to balance supply and demand.

(a) State on thing that would cause market supply to increase ( cause the supply curve to shift to…

Answered: For questions 5 I need to know if input…

For questions 5 I need to know if input prices will rise or fall For questions 6 i need to a explanation of the sellers behavior. Law of demand states that quantity demanded is related to 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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Question

For questions 5 I need to know if input prices will rise or fall

For questions 6 i need to a explanation of the sellers behavior. Law of demand states that quantity demanded is related to price

**Question Set:**

(a) State one thing that would cause market supply to increase (cause the supply curve to shift to the right).

(b) If supply were to increase, would equilibrium price increase or decrease?

(c) If supply were to increase, would equilibrium quantity increase or decrease?

**Answers:**

(A) Input price.

(B) Increased supply will cause the equilibrium price to fall.

(C) Excess supply will cause the equilibrium price to fall, and quantity will increase.

**How Firms React to Shortages in the Market**

**Firms will react to a shortage (excess demand) by __________ prices. Why will they do this?**

Firms typically respond to shortages by increasing prices to reduce demand and bring prices back to an equilibrium level. In any market, when the demand for a product is high, firms tend to increase its price. This behavior aligns with the law of demand, which states that as demand increases, prices are likely to rise to balance supply and demand.

Definition Definition Economic principle that states that as the price of a good or service increases, the quantity demanded by consumers decreases, while a decrease in price leads to an increase in quantity demanded, assuming all other factors affecting the demand remaining constant.

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