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 , Show the effect on the supply curve .

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 ,

Show the effect on the supply curve .

 

answer:

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

Supply curve will shift to left to S2 due to rise in cost for suppliers. Thus, in market equilibrium price will increase and quantity will decrease.

b) Wages of workers in the industry fall

Wages fall implies cost of production for producer falls, which will increase the supply.

 

Supply curve thus shifts to right. In market equilibrium, price will decline and quantity will rise.

c. There is improvement in technology

Improvement in technology will raise supply at the same price.

 

 

It will lead to shift in supply curve to the right. In market equilibrium, it will lead to decline in prices and increase in quantity.

d. Price of the good falls

Fall in the price of the good will cause movement along supply curve rather than a shift

Decline in price will lead to downward movement on supply curve. It will create excess demand in the economy.

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