What happens to equilibrium supply increases and demand price rises; quantity fa

Question

What happens to equilibrium supply increases and demand price rises; quantity falls price and quantity both price and quantity both price falls, quantity rises price and quantity when remains unchanged? rise fall Quantity Quantity supplied Price 4.00 150.000 4.00 220.000 If the federal government decided to support the price of wheat at $4.00 per bushel (price floor), would there be a surplus or shortage? How much it would be? Path p Wordso QUESTI 10 points Save Answer Why does the demand for some products rise when income falls? What is special about these products?

Explanation / Answer

1.
D

Due to increase in supply, the equilibrium quantity will increase and the price will decrease at a new equilibrium level.

2.
At $4 price floor, there will be a surplus.

Size of surplus = supply - demand = 220000-150000 = 70000 (bushels of wheat)

3.
It happens with the inferior goods or Giffen goods. For these products, the demand increases with a fall in income and vice versa. These goods are called Giffen goods and these products and negative income elasticity.

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