Economics Problems Set 1 Essay
Dennis J. Johnson
Problems A, B, and C
This assessment will be an analysis of graphed data and changes in supply and demand for three economic problems. Problem A involves production possibilities for consumer and capital goods, problem B is an evaluation of changes in supply and demand equilibrium, and finally, problem C involves pricing with relevance to supply and demand. Successful completion of this assessment demonstrates proficiency in; applying theories, models, and practices of economic theory, analyzing solutions with support from relevant data, resources, references, and economic principles, analyzing graphed and circular …show more content…
Answer: According to the law of supply and demand, since a decrease in demand, and an increase in supply renders the effect on equilibrium quantity indeterminate with a reduction in equilibrium price…… and since a decrease in both demand and supply decreases equilibrium quantity and renders equilibrium price indeterminate, it can be concluded that the effect on both equilibrium quantity and equilibrium price are indeterminate. 3. Supply increases and demand is constant.
Answer: According to the law of supply and demand, since an increase in supply and a decrease in demand renders the effect on equilibrium quantity indeterminate and decreases the equilibrium price….and since an increase in supply and an increase in demand increases equilibrium quantity, yet renders an indeterminate effect on equilibrium price, it can be concluded that the effect on both equilibrium quantity and equilibrium price are indeterminate. 4. Demand increases and supply increases.
Answer: According to the law of supply and demand, if the increase in demand is greater than the increase in supply, the equilibrium price will rise, inversely, the equilibrium price will fall. The effect on equilibrium quantity is indeterminate because the increases in demand and supply both raise the equilibrium quantity.