Changes To Supply, Quantity Supplied, Demand, And Quantity ✓ Solved

Changes to Supply, Quantity Supplied, Demand, and Quantity

Using the table, for each line item and its associated column, describe how the market for each specific product will be affected by the associated event indicating whether it will rise, fall, or no change.

For example, in the first line item for the market of corn, based upon the event of a severe drought, the price will either rise or fall or no change, demand curve will shift left (fall) or right (rise) or no change, supply curve will shift left (fall) or shift right (rise) or no change, quantity demanded will rise, fall, or no change, and quantity supplied will either rise, fall, or no change.

Event Market for: Price Demand Curve Supply Curve Quantity Demanded Quantity Supplied A severe drought hits the Midwest corn growers Corn The U.S. government reduces taxes on imported lumber Building The federal government raises the minimum wage from $7.25 per hour to $11.00 per hour Minimum wage jobs Technology improves for automobile assembly Autos

Paper For Above Instructions

The study of microeconomics involves understanding how various factors influence the supply and demand for goods and services. This analysis will use specific events that affect particular markets, contemplating their impact on price, the demand curve, the supply curve, quantity demanded, and quantity supplied.

A Severe Drought Hits the Midwest Corn Growers

In this event, the supply of corn is expected to decline significantly due to less availability of crops. The price of corn is likely to rise as a result of decreased supply. Consequently, the supply curve will shift to the left, indicating a reduction in supply. As prices rise, the quantity demanded will fall, leading to a decrease in the quantity of corn purchased. Therefore, for the market for corn:

  • Price: Rise
  • Demand Curve: No change
  • Supply Curve: Shift left
  • Quantity Demanded: Fall
  • Quantity Supplied: Fall

The U.S. Government Reduces Taxes on Imported Lumber

Reducing taxes on imported lumber lowers the cost for suppliers and incentivizes increased supply. This change in policy can shift the supply curve for lumber to the right, indicating an increase in supply. As supply increases, the price of lumber is likely to decrease. At the same time, quantity demanded may increase as lower prices typically encourage more purchases. Thus, for the market for lumber:

  • Price: Fall
  • Demand Curve: Shift right
  • Supply Curve: Shift right
  • Quantity Demanded: Rise
  • Quantity Supplied: Rise

The Federal Government Raises the Minimum Wage from $7.25 to $11.00 per Hour

An increase in the minimum wage has a dual effect in the labor market and the market for goods and services. On one hand, it may lead to an increase in income for workers, which can raise demand for various goods and services as consumers have more purchasing power. Conversely, employers may face higher labor costs leading to reductions in hiring or higher prices for consumers. For the market for minimum wage jobs:

  • Price: Rise (wages)
  • Demand Curve: Shift left (for low-skill jobs due to higher costs)
  • Supply Curve: Shift right (more people might seek jobs at higher wages)
  • Quantity Demanded: Fall
  • Quantity Supplied: Rise

Technology Improves for Automobile Assembly

Technological advancements in the automobile assembly sector are likely to improve productivity and efficiency. As a result of enhanced technology, the supply of automobiles will likely increase, shifting the supply curve to the right. This increase in supply may lead to decreased vehicle prices, subsequently increasing the quantity demanded. Therefore, for the market for automobiles:

  • Price: Fall
  • Demand Curve: Shift right
  • Supply Curve: Shift right
  • Quantity Demanded: Rise
  • Quantity Supplied: Rise

In conclusion, understanding the connection between supply, demand, and external events is crucial for anticipating market behavior. Each of the specified events provides valuable insights into how various factors interact within a microeconomic framework, affecting prices, supply and demand curves, and the quantities demanded and supplied by consumers and producers.

References

  • Krugman, P., & Wells, R. (2020). Economics (5th ed.). Worth Publishers.
  • Mankiw, N. G. (2021). Principles of Economics (9th ed.). Cengage Learning.
  • Parkin, M. (2018). Microeconomics (12th ed.). Pearson.
  • Varian, H. R. (2014). Intermediate Microeconomics: A Modern Approach (9th ed.). W.W. Norton & Company.
  • Thomson, J. E. (2017). Microeconomic Analysis. Columbia University Press.
  • Case, K. E., & Fair, R. C. (2019). Principles of Economics (12th ed.). Pearson.
  • Stiglitz, J. E., & Walsh, C. E. (2018). Principles of Microeconomics (5th ed.). W.W. Norton & Company.
  • Blinder, A. S. (2016). Economics: Principles and Policy (13th ed.). Cengage Learning.
  • Samuelson, P. A., & Nordhaus, W. D. (2010). Economics (19th ed.). McGraw-Hill Education.
  • McConnell, C. R., & Brue, S. L. (2019). Microeconomics (21st ed.). McGraw-Hill Education.

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