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Question

10) For each of the following changes, show the effect on the supply curve and state what will happen to market equilibrium price and quantity in the short run.

a.         The government requires pollution control filters that raise costs on goods.

b.         Wages of workers in this industry fall.

c.         There is an improvement in technology.

d.         The price of the good falls.

e.         Producers expect that the price of the good will fall in the future.

Solution

a. xxxxxy xxxxxxxxx; xxxxxxxxxxx price xxxxx and xxxxxxxy xxxxx. xxxxxxxxxxx:

xxyxxxxx xxxx xxxxxx cost xx production xxxx xxxxxxxx xxxxxy. It xxxxx supply xxxxx xxxxxx xxxxxxxx leading xx decrease xx xxxxxxxxxxx xxxxxxxy and xxxxxxxx in xxxxx xxxxx. b. xxxxxy increases; xxxxxxxxxxx xxxxx xxxxx and xxxxxxxy rises.

xxxxxxxxxxx:

xxyxxxxx that xxxxxxxxx xxxx xx production (xxxxxxxx in xxxxx xxxxx xx fall xx cost xx xxxxxxxxxx) xxxx increase xxxxxy. It xxxxx xxxxxy xxxxx shifts xxxxxxxxx leading xx xxxxxxxx xx equilibrium xxxxxxxy and xxxx xx xxxxx level.

c. xxxxxy xxxxxxxxx; xxxxxxxxxxx price xxxxx and xxxxxxxy xxxxx. xxxxxxxxxxx:

xxyxxxxx xxxx xxxxxxxxx cost xx production (xxxxxxxxxxxxx xxxxxxxxxxx xxxxx to xxxx in xxxx xx xxxxxxxxxx) will xxxxxxxx supply. xx xxxxx xxxxxy curve xxxxxx rightward xxxxxxx xx xxxxxxxx in xxxxxxxxxxx quantity xxx xxxx xx price xxxxx.

x. x xxxx in xxx price xx x xxxx leads xx a xxxxxxxx xxxxx xxx supply xxxxx, and xxx xxxxxxxy xxxxxxxx will xxxxxxxx as xxxxx xxxxxxxxx. xxxxxxx price xxx quantity xxxxxxxx xxx xxxxxxxy related.

e. xxxx xxxxxxxxx xxxxxx that xxx price xx xxx xxxx will xxxx in xxx xxxxxx,xxxxxy xxxx increase xxx and xxxxxxxxxxx xxxxx xxxx fall xxx quantity xxxx xxxx.

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10) For each of the following changes, show the effect on the supply curve and state what will happen to market equilibrium price and quantity in the short run.

a.         The government requires pollution control filters that raise costs on goods.

b.         Wages of workers in this industry fall.

c.         There is an improvement in technology.

d.         The price of the good falls.

e.         Producers expect that the price of the good will fall in the future.

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