4. Intuitive Question 1 (15 pts) For each scenario below, explain how the supply

Question

4. Intuitive Question 1 (15 pts) For each scenario below, explain how the supply or demand curve would shift, and explain how the equilbrium price and quantity would change. Assume that each market always starts in equilibrium. (a) Peanut butter market when the price of jelly increased. (b) Lemonade market when firms have developed a new type of fertilizer that allows more lemons grown per tree. (c) Fast food market when minimum wage increased. (d) Coffee market after a report comes out that (e) Pepsi market when Coke workers go on strike

Explanation / Answer

A.Peanut butter and jelly are substitutes.When the price of jelly rises,people increase the consumption of peanut butter.The demand curve of peanut butter shifts to the right raising price and quantity.

B.This new technology helps firm's to produce more lemons.The supply of lemonade will rise.Supply curve shifts to the right reducing price and increasing quantity.

C.When minimum wages are increased more workers join the market.This leads to a rise in supply.Price falls and quantity rises.

D.The benefit from drinking coffee would shift the demand curve for coffee to the right increasing price and quantity.

E.When coke workers would go on strike,there would be unavailability of coke.The demand of Pepsi will rise.Demand curve shifts to the right increasing price and quantity.

Related Questions

Navigate

• Browse (All)
• Browse 4
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.