Help with Introductory Economics question. (1 Viewer)

[Rayanaldo]

I need help with this question for Intro Economics:

Given that the demand curve is fixed, what effect will each of the following have on the demand for product B?
a.) There is a technological advance in the methods of producing B.
b) There is a decline in the number of firms in the industry that produces B.
c.) There is an increase in the prices of resources required to produce B.
d.) There is an expectation that the equilibrium price of B will be lower in the future than it is currently.
e.) There is a decline in the price of product A, a good whose production requires substantially the same techniques and resources as does the production of B.

Can anyone help? I need to do this by Monday. Any help would be greatly appreciated.

 

[fretwell]

Have you got the textbook for this subject yet?

 

[Rayanaldo]

Yeah. I've got a basic idea to answer this question but i need some help just to make myself sure.

Do you have the book? If so, have you done this question?

 

[x-y-z]

I need help with this question for Intro Economics:

Given that the demand curve is fixed, what effect will each of the following have on the demand for product B?
a.) There is a technological advance in the methods of producing B.
b) There is a decline in the number of firms in the industry that produces B.
c.) There is an increase in the prices of resources required to produce B.
d.) There is an expectation that the equilibrium price of B will be lower in the future than it is currently.
e.) There is a decline in the price of product A, a good whose production requires substantially the same techniques and resources as does the production.

Can anyone help? I need to do this by Monday. Any help would be greatly appreciated.

a) supply increases (shifts the supply curve to the right). there is now excess supply and to clear this excess suppliers reduce their price. demand expands (a movement along the demand curve to the right) and a greater quantity of b is demanded and supplied at the same price level., leading to a new equilibrium price level.

b) supply decreases (represented by a shift to the left of the original supply curve). there is excess demand at the original price level and consumers bid up the price in order to ration out existing goods. This is represented by a movement to the left along the original demand curve (a shift in the quantity demanded). A new equilibrium is stablished at a lower quantityand higher price.

c) same as above

d) this one im not sure about. a movement along the demand curve to the left, decreasing the quantity demanded?

e) decrease in demand of product b.

Sorry i cant really concentrate right now, ill get back to you with more detailed/correct answers later. if any of my answers are wrong feel free to correct me.

 

[Rayanaldo]

a) supply increases (shifts the supply curve to the right). there is now excess supply and to clear this excess suppliers reduce their price. demand expands (a movement along the demand curve to the right) and a greater quantity of b is demanded and supplied at the same price level., leading to a new equilibrium price level.

b) supply decreases (represented by a shift to the left of the original supply curve). there is excess demand at the original price level and consumers bid up the price in order to ration out existing goods. This is represented by a movement to the left along the original demand curve (a shift in the quantity demanded). A new equilibrium is stablished at a lower quantityand higher price.

c) same as above

d) this one im not sure about. a movement along the demand curve to the left, decreasing the quantity demanded?

e) decrease in demand of product b.

Sorry i cant really concentrate right now, ill get back to you with more detailed/correct answers later. if any of my answers are wrong feel free to correct me.

Thank you very very much. Very appreciated.

 

[theone123]

Thank you very very much. Very appreciated.

good luck dude on this subject, its not hard nor easy, i find the stuff is different to HSC Eco tho :S

 

[Rayanaldo]

Thanks natstar. The information is really sinking in now. Its just that i didn't do Economics in year 11 or 12.

BTW, my tutor for this unit is Dr Harbajan Kehal. Also, my lecturer Samanthala Hettihewa is pretty good.

 

[jlh]

wow this gets me thinking.. econ rocks.. but i haven't done anything econ related in months...

sorry but is there anything missing from question e?

 

[theone123]

Thanks natstar. The information is really sinking in now. Its just that i didn't do Economics in year 11 or 12.

BTW, my tutor for this unit is Dr Harbajan Kehal. Also, my lecturer Samanthala Hettihewa is pretty good.

Samanthala Hettihewa is teh author of teh txt book, heh maybe tats why

 

[Rayanaldo]

wow this gets me thinking.. econ rocks.. but i haven't done anything econ related in months...

sorry but is there anything missing from question e?

Oh yeh, at the end after the word production, it is suppose to say "of B".

Sorry.

 

[jlh]

Oh yeh, at the end after the word production, it is suppose to say "of B".

Sorry.

ok:
e.) There is a decline in the price of product A, a good whose production requires substantially the same techniques and resources as does the production of B.

there is no answer to this because you need to know what caused the price of good A to drop. was it a supply shock or a demand shock for good A? its not stated in the question, so the answer would be something along the lines of not enough information to see impacts on good B.

if it was a supply shock that caused the price of A to drop, then seeing as good A and good B use the same production methods, then in essence, the price of good B will also drop because of the increase in supply in the market.

if it was a demand shock that caused the price of good A to drop, then that means demand would of had to have shift left (drop in market demand for some reason), then that means demand for good B would have to increase. but since we are keeping the demand curve for good b constant, this is irrelevant!! (just thought i'd add it though)