Hey there! Sign in to join this conversationNew here? Join for free
x Turn on thread page Beta

Market Equilibrium Exercises HELP!!!! watch

Announcements
    • Thread Starter
    Offline

    0
    ReputationRep:
    MICRO ECONOMICS

    Hi Guys,

    Been set 2 tasks to stretch our learning but have no idea..

    I need to draw a diagram to show the affect and then explain it:

    1) The market for butter where there is a temporary health scare concerning its consumption, coinciding with a rise in the cost of animal feed (an input cost)

    2) The market for quality wooden furniture (made with imported hardwood), with the sterling rising against most world currencies, combined with a long term rise in real incomes.

    Please helppp
    Offline

    14
    ReputationRep:
    1) as there is a concern to do with consumption, the demand will fall as consumers are worried about the product (i.e. shift to left). as the cost of production increases, supply also is cut down, (shift to left)

    overall, quantity of product decreases, price may stay around the same depending on how much each shifts!

    2) as the furniture is made of imported goods and the sterling is rising, one pounds gets us more of a foreign currency, thus lower costs, larger supply (shift to right). as long term rises in real wages, people have more disposable income and will be more willing to buy high quality/luxury products, thus demand (you may want to consider saying demand increases in the long term) increases (shift to right). In this case, the quantity increases due to higher supply and demand, price once again affected by both
 
 
 
Reply
Submit reply
Turn on thread page Beta
Updated: January 29, 2015
Poll
Do you like carrot cake?

The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

Write a reply...
Reply
Hide
Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.