1) The graphs below show four possible shifts in demand or supply that could occ

Question

1)  The graphs below show four possible shifts in demand or supply that could occur in particular markets.  Relate each of the events described below to one of them.

a)   The number of firms in a market increases. PANEL____

b) The American Cancer Society announces that folic acid in orange juice may reduce risk of cancer.  What happens  in the market for orange juice? PANEL ____

c)  How do decreasing incomes affect the market for a normal good?  PANEL _______

d) The cost of intermediate goods increases.  PANEL _______

The graphs below show four possible shifts in demand or supply that could occur in particular markets. Relate each of the events described below to one of them. The number of firms in a market increases. PANEL____ The American Cancer Society announces that folic acid in orange juice may reduce risk of cancer. What happens in the market for orange juice? PANEL ____ How do decreasing incomes affect the market for a normal good? PANEL _______ The cost of intermediate goods increases. PANEL _______

Explanation / Answer

a) Panel C, supply increases and there is no price change.. shift outward of the supply curve

b) Panel A, demand increases casuing a shift outward of the demand curve

c) Panel B, As income increases the demand for a normal good will decrease.. causing a shift inward of the supply curve. price of normal good never changes therefore it causes a shift.

d) Panel D, as the price of these goods increase the supply will decrease causing a shift inward of the supply curve

I have explained in detail I hope you consider my time and effort thanks

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