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Name: Malik Rashid Nazir Arid N0: 19-Arid-5310
Name: Malik Rashid Nazir Arid N0: 19-Arid-5310
Ans: This new tax saving makes farming relatively more profitable than before.
More people would switch to farming, thus increase in the number of supplies.
Q2: Indicate how you think each of the following would effect demand in the indicated market:
a. Buyers in the market for pizza read a study linking hamburger consumption to heat
disease.
Ans: The demand curve will shift up (right) pizza and hamburger are both junk food and can
be consumed interchangeably if a study shows proven connection between hamburger
consumption and heat pizza for now. People will probably switch to consumes pizza going
forward.
b. Buyers in the market for CDs learn of an increase in the price of CDs.
Ans; A price of CDs goes up, people will buy less. But the demand curve will not shift
because change in quantity demanded verses change in demand
c. Buyers in the market for CDs learn of an increase in the price of audiocassettes.
Ans. The demand curve will shift up (right) CDs and audiocassettes are substitute they both
can be used to record and play music or soundtrack.
Q3: What will happen to the equilibrium price and quantity of oranges if the wage paid to orange
pickers rises?
Ans: wage paid to oranges pickers is actually one of the production costs of orange. If now the
production cost increases, suppliers will find it less profitable and so they will begin producing
less oranges to the market. As a result the supply of orange will decrease.
There is a change in supply because increase in wage paid is an outside factor affecting the
supply curve it will cause the supply curve shift up (left).
Equilibrium price of orange increase and equilibrium quantity of oranges decreases when the
wage paid to orange pickers increases.
Q4: How will an increase in the birth rate affect the equiulibrium price of land?
Ans: Supply curve represents the relationship between the quantity supplied good or survices and
price while demand curve represent the relationship between the quantity demanded of a good or
the sevices and price.
Intersection point of both the curve gives the market price and quantity.
Q5: what will happen to equilibrium price and quantity of fish if fish oils are found to help
prevent heat desease?
Ans: if this happen people will probably increase healthier, the demand for fish will increase. It
is change in demand, increase in fish consumption is an outside factor effecting the demand
curve, it will cause the demand curve shift up(right).
Q5: what will happen to equilibrium price and quantity of beaf if the price chickenfeed
increases?
Ans: beaf and chiken are the substitutes; increase in price of chikenfeed shifts the supply curve
of the chiken to left. Resulting in an increase in the price of chiken, therefore people will
generally switch from consuming beaf as a result demand of beaf increases.
This is an example of substitute goods, here animal oil and vegitable oil are substitute goods
because the reduction in the consumption of animal oil will increase the demand for vegitable
oil.
Q8: A survey…….
a. A severe drought………
Ans: by reducing their head, dairy formers reduces the supply of ice cream, a leftward shift of
the supply curve for cream. As a result the market price of the cream rises.
b. A new report……
Ans: consumers will now demand more chocolate icecream at any given price, represented by a
right ward, shift of the demand curve. As a result, both equilibrium price and quantity rises.
c. The discovery….
Ans: the price of substitutes has fallen , leading consumers to substitutes it for the chocolate
icecream. The demand will decrease. This will leftward shift of demand curve. Both equilibrium
price and quantity fall.
d. New technology…..
Ans: because the cost of producing icecream falls manufacturers are willing to supply more unit
of chocolate. This is represented by rightward shift and result in fall in price and rise in quantity.
Case 1:
Journalist are an input in the production in newspaper; an increase in their salaries will cause
newspapers publishers to reduce the quantity supplied at any given price.
Case 2:
The textbook publishers will offers more textbook for sale at any given price. Representing a
rightward shift of the supply curve from s1 and s2. Price will fall and quantity will rise.
Part B:
Both A and B are complements. If the price of B increase then demand for A will decrease and
the demand curve for A shifted to the left.