Principles Of Macroeconomics
13th Edition
ISBN: 9780135162163
Author: CASE, Karl E., Fair, Ray C., Oster, Sharon M.
Publisher: Pearson,
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Question
Chapter 4, Problem 1.1P
(a)
To determine
To illustrate the given situation with
(a)
Expert Solution
Explanation of Solution
Figure 1 illustrates the
The figure 1 shows the
Economics Concept Introduction
Demand Curve: A demand curve is a graph which shows the quantities of a commodity that the consumers will buy at different price levels.
Supply Curve: A supply curve is a graph which shows the quantities of a commodity that the producers are willing to sell at different price levels.
(b)
To determine
Illustration of shift in supply curve.
(b)
Expert Solution
Explanation of Solution
Figure 2 illustrates the change in market equilibrium.
The figure2 shows the demand and supply curves for the hogs. The horizontal axis measures the quantity and the vertical axis measures the price of the commodity. The increase in the supply of the hogs has led to a rightward shift of the supply curve and while the demand remains unchanged. As a result the equilibrium changes and the prices decrease from 81 cents to 70 cents and the quantity increases from Q0 to Q1.
(c)
To determine
Illustration of market equilibrium.
(c)
Expert Solution
Explanation of Solution
Figure 3 illustrates the change in market equilibrium.
Figure 3
The figure3 shows the demand and supply curves for the organic produce. The horizontal axis measures the quantity and the vertical axis measures the price of the commodity. The initial increase in the demand for organic produce led to the shift of the demand curve from D0 to D1. However, the increase in the number of farmers producing the organic produce also increased leading to an increase in the supply of the product which shifts the supply curve from S0 to S1. The combined effect is that the price of organic produce reduces from P0 to P1 as the quantity supplied increases from Q0 to Q1.
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