Assignment

Module 4: Assignment

SOB1115/ Introduction to Microeconomics Theory

Avery Candex

Graduate School of Business

University of Zambia

March 2021

[Melissa Inzunza]

Date of Submission: 12 June 2022

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ASSIGNMENT 2

Introduction

(2021) Demand simply refers to a customer's willingness to purchase products and

services without hesitation and pay the full price. Simply put, demand is the quantity of

things that buyers are willing to buy at various prices during a particular period of time.

Demand is defined by preferences and choices, which may be expressed in terms of cost,

advantages, profit, and other factors.

Scenario

a. People decide to have more children

The demand for minivans increases (shift to the right) and as well the price increases as

the quantity increases too. Price is denoted by P, quantity by Q, demand by D, supply by S

and equilibrium by E

Diagram to show the effect on the price and quantity of minivans

Price
S
D1 D2

P2
P1 E2
E1

Quantity

Q1 Q2

b. A strike by steelworkers raises prices

With this situation, supply will decrease thereby causing a shift to the left on demand and

supply diagram Author Removed At Request Of Original Publisher. Price will increase as
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ASSIGNMENT 3

the quantity supplied decreases. Price is denoted by P, quantity by Q, demand by D,

supply by S and equilibrium by E

Diagram to show the effect on the price and quantity of minivans

Price

D S2

S1
E2
P2
E1
P1

Quantity
Q2 Q1

c. Engineers develop new automated machinery to produce minivans.

With this situation, supply will increase by shifting the supply line towards the right. An

increase in quantity supplied will cause prices to decrease. Price is denoted by P, quantity by

Q, demand by D, supply by S and equilibrium by E

Diagram to show the effect on the price and quantity of minivans

Price

D S1

S2

E1
P1
E2
P2
Quantity

Q1 Q2
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ASSIGNMENT 4

d. The price of sports utility vehicles rises.

There is a demand increase, where the demand line shifts towards the right. In cases where

the sports utility vehicles are substitutes for minivans, the price and quantity demanded will

both increase. Price is denoted by P, quantity by Q, demand by D, supply by S and

equilibrium by E

Diagram to show the effect on the price and quantity of minivans

Price

D1 D2 S

P2 E2

E1
P1

Quantity
Q1 Q2

e. A stock market crash lowers people’s wealth

This situation will affect the demand for minivans. Demand will decrease by shifting

towards the left. The price of the minivan and quantity demanded will both decrease. (Chand,

2013)
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ASSIGNMENT 5

Diagram to show the effect on the price and quantity of minivans

Price

D2 D1 S

P1 E1

E2
P2

Quantity

Q2 Q1

Conclusion

While demand is concerned with the consumer's desire to earn a profit, supply is

concerned with the seller's desire to make a profit. A supply schedule illustrates how much

goods a supplier is ready and able to give the market at particular price points over a set

period of time.
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ASSIGNMENT 6

References

1. (2021, March 22). General Data Protection Regulation(GDPR) Guidelines BYJU’S.

BYJUS. https://byjus.com/commerce/demand/

2. Author Removed At Request Of Original Publisher. (2016, June 17). 3.3 Demand,

Supply, and Equilibrium – Principles of Economics. Pressbooks.

https://open.lib.umn.edu/principleseconomics/chapter/3-3-demand-supply-and-

equilibrium/

3. Chand, S. (2013, December 3). The Change in Supply: Increase in Supply and

Decrease in Supply | Economics. Your Article Library.

https://www.yourarticlelibrary.com/education/the-change-in-supply-increase-in-

supply-and-decrease-in-supply-economics/9198