1.Steel mill wage costs increase by 18 percent over a year. What is the likely e
ID: 1093379 • Letter: 1
Question
1.Steel mill wage costs increase by 18 percent over a year. What is the likely economic effect on the market for steel?
a
There is an increase in the cost of producing steel, which shifts the supply curve of steel to the right, thereby increasing the price of steel.
b
There is an increase in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel.
c
There is a decrease in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel.
d
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2.Refer to the table below. If D1 and S1 represent the demand and supply schedules in a particular market, then the equilibrium price and quantity are __________ and __________, respectively.
Price
D 1
D 2
S 1
S 2
$12
5
9
19
14
$10
8
12
17
12
$8
11
15
15
10
$6
13
18
13
8
$4
16
21
11
6
$2
18
24
9
4
There is an increase in the cost of producing steel, which shifts the supply curve of steel to the right, thereby increasing the price of steel.
b
Explanation / Answer
1.
There is an increase in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel.
2.
Equilibrium in market 1 occurs at the point D1 = S1.
This occurs at the point: $6, 13
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