When only demand or supply changes, it is possible to predict the change inequilibrium prices and quantities in the market. Yet, equilibrium cannot predict theprecise outcome if demand and supply change simultaneously.Read the following scenario and answer the questions that follow.Scenario 2Equilibrium is the condition in the market system when the quantity demanded is equal to thequantity supplied. The equilibrium condition in the market for Rooibos Tea is depicted in thediagram below. PoP5.2EoSoDoQoIn the market for Rooibos tea, the following information is provided:A recent article, "The Magic Powers of Rooibos Tea", made headlines in South Africa. Thearticle provides readers with the significant health benefits of Rooibos Tea endorsed bymedical professionals.Rooibos Tea farmers in South Africa explained that the article influenced the tastes andpreferences of consumers. Yet, at the same time explains that the production of RooibosTea is highly impacted due to a devastating drought that destroyed the majority of rooibosharvests.The farmers explain that devastating drought and the surge in demand occurred simultaneously inthe market.For Scenario 2, answer the following questions:5.1Using three separate graphs, illustrate and explain how simultaneous changes indemand and supply for Rooibos Tea will influence the price and quantity. Youranswer should include three possible outcomes for the simultaneous changes indemand and supply:a) Outcome 1: The relative changes in demand and supply are equal.b) Outcome 2: The relative change in supply is greater than the relative change indemand.c) Outcome 3: The relative change in demand is greater than the relative change insupply.[Important: Clearly name all the curves and label all points and changes onyour graph(s).]Based on your answer in 5.1, what can the farmers conclude regarding theuncertainty of price and quantity following simultaneous changes?

Demand :Demand is when a consumer has the desire to buy something at the price that he is ready to…

For Scenario 2, answer the following questions: 5.1 Using three separate graphs, illustrate and explain how simultaneous changes in demand and supply for Rooibos Tea will influence the price and quantity. Your answer should include three possible outcomes for the simultaneous changes in demand and supply: a) Outcome 1: The relative changes in demand and supply are equal. b) Outcome 2: The relative change in supply is greater than the relative change in demand. 5.2 c) Outcome 3: The relative change in demand is greater than the relative change in supply. [Important: Clearly name all the curves and label all points and changes on your graph(s).] Based on your answer in 5.1, what can the farmers conclude regarding the uncertainty of price and quantity following simultaneous changes?

For Scenario 2, answer the following questions: 5.1 Using three separate graphs, illustrate and explain how simultaneous changes in demand and supply for Rooibos Tea will influence the price and quantity. Your answer should include three possible outcomes for the simultaneous changes in demand and supply: a) Outcome 1: The relative changes in demand and supply are equal. b) Outcome 2: The relative change in supply is greater than the relative change in demand. 5.2 c) Outcome 3: The relative change in demand is greater than the relative change in supply. [Important: Clearly name all the curves and label all points and changes on your graph(s).] Based on your answer in 5.1, what can the farmers conclude regarding the uncertainty of price and quantity following simultaneous changes?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

The market supply and demand equations for a given product are given by the expressions QD=200-50p QS=-40+30P a. Find the equilibrium price and Quantity b. Suppose that there is an increase in demand and supply to QD=300-50P QS=-20+30P Respectively, find the new equilibrium point. In addition to this, show the impact of change in demand and supply using axing graph.
Given the two functions below: y=10e-0.5q and y=7ln5q Draw the two functions for the interval -1<q<3. From the diagram drawn identify which of the two functions represents the demand curve, supply curve and name the intercept(s) formed. Economically, it is said that equilibrium is established when the demand curve intercepts the supply curve. Hence or otherwise, determine the equilibritum price and quantity.
PLEASE ANSWER A The Market for Chicken Meat in Davao Citya. Fill in the missing algebraic signs ( + or -) of the demand and supply equations for chicken meat belowaccording to the hypothesized direction of relationships. where:Q = quantity of chicken meat in kilograms, per dayPC = price of chicken meat (in pesos per kilogram)I = income of average consumer (in pesos per day)PB=price of beef (in pesos per kilogram)W=wage rate paid in the poultry business (in pesos per day)PF= price of mixed feeds (in pesos per kilogram) Demand: QD = 20 ___ 1.5PC____0.8 I ____ 0.6 PBSupply: QS = - 20 ___ 4.5PC____0.5 W ____ 3 PFb. Suppose the other variable affecting the demand for and supply of chicken meat have the followingvalues: I = P300/day ; PB = P100/kg; W = P100/day; PF = P10/kgi. Derive the simple demand and supply equations where Q is a function of P.ii. Solve for the equilibrium price and quantity in the market.iii. Suppose the government imposes a price ceiling of P50/kg:1. What happens…
Q3Use a matrix method to find the equilibrium prices and quantities where the supply and demand functionsfor Good 1, Good 2 and Good 3 are asQd1 = 50 − 2P1 + 5P2 − 3P3, Qs1 = 8P1 − 5Qd2 = 22 + 7P1 − 2P2 + 5P3, Qs2 = 12P2 − 5Qd3 = 17 + P1 + 5P2 − 3P3, Qs3 = 4P3 − 1
Assume the Supply of Kidneys is expressed as: Qs = 800 +.2P Assume the Demand for Kidneys is expressed as: Qd = 16,000 - .2P Due to the 1984 act prohibiting the purchase and sale of organs for transplant, supply will be limited to the number of kidneys individuals will donate (the number of kidneys donated when the price = 0) Graphically, show the supply and demand for kidneys before prohibition. Solve algebraically for the equilibrium price and quantity. How many kidneys will be available for transparent given the prohibition of selling a kidney in the market? Draw in what the new supply curve will look like. Will a shortage or surplus of kidneys result? What happens to the opportunity cost of acquiring a kidney?
Assuming hypothetical equilibrium in Demand/Supply Model of Apples, illustrate impact of following events:Suppose the Doctors recommend eating Apples every morning. The Monsoon rains adversely affect the Apple Harvest. The government announces increase in Wages of workers. The price of petrol in the market comes down. Consumers Income falls during government imposed Lockdowns due to health concerns. Given below is the Supply Schedule of Nestle Milk per liter:Price of Milk per liter (in Rs) 100 200 300 400Quantity Supplied per day in liters (in 1000s) 100 200 300 400Use the above data to illustrate the Supply Curve in a graph with complete labels. Assume Rs. 200 is the original price of milk per liter and 200,000 liters is the original quantity of supply. Suppose the price rises from Rs. 200 to Rs. 300, what will be the amount of Quantity Supplied?Illustrate the impact of (C) on the graph. Is this a movement along the supply curve or shift of the curve?
The figure depicts the market for shoes. Suppose that a less expensive material for making shoes is developed. What effect will this event have on supply and demand in the shoe market? Demonstrate your answer graphically. Instructions: Use the tool provided "New line" to draw either a new demand or supply curve that reflects the market effect of this event. Plot only the endpoints of the line. if a less expensive material developed, the- will-. This will cause the equilibrium price to- and the equilibrium- quantity to-
The figure depicts the market for gasoline. Suppose that consumers expect the price of gasoline to decrease in the future. What effect will this event have supply and demand in the gasoline market? Demonstrate your answer graphically Instructions: Use the tool provided 'New line' to draw either a new demand or supply curve that reflects the market effect of this event. Plot only the endpoints of the line.
The following table shows the weekly demand and supply in the market for ice cream in Detroit. dy Tools Price Quantity Demanded Quantity Supplied (Dollars per gallon of ice cream) (Gallons of ice cream) (Gallons of ice cream) 4 2,000 200 Tips 1,600 600 12 1,200 800 Tips 16 800 1,200 20 400 1,800 כ On the following graph, plot the demand for ice cream ușing the blue point (circle symbol). Next, plot the supply of ice cream using the orange point (square symbol). Finally, use the black point (plus symbol) to indicate the equilibrium price and quantity in the market for ice cream. g Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. 24 Demand 20 16 Supply 12 MacBook Air per gallon of ice cream)
The supply and demand for a computer in a store are given for two prices: for a price of $800, the demand quanity is 50 and the supply quanity 230: for a price of $50, the demand quanity is 150 and the supply quantity 150. Let a represent the quanity A. Write an equation representing the demand function B. Write an equation representing the supply function C. Find the equlibrium quantity and price
A key skill in economics is the ability to use the theory of supply and demand to analyze specific markets. With this assignment, you get a chance to demonstrate your ability to apply what you have learned to the coffee market. Be sure to answer all parts of each of the scenarios below. Students may utilize Paint, Word (the shapes tool), or hand draw the graphs. Scenario 2: Suppose the National Institute of Health publishes a study finding that coffee drinking reduces the probability of getting colon cancer. How do you imagine this will affect the market for coffee? Which determinant of demand or supply is being affected? Show graphically with before and after curves on the same axes. How will this change affect the equilibrium price and quantity of coffee? Explain your reasoning.
205Q and P = 10 + 20. Consider the following demand and supply equations: P = a. Draw a neatly labelled diagram showing the demand and supply curves. b. Find the equilibrium level of price and quantity. c. Suppose this is the demand and supply of apples. List three factors that may change the demand for apples. Explain. List three factors that may change the supply for apples. Explain. d. Suppose the price rises from the equilibrium level to 15. Calculate the price elasticity of demand and the price elasticity of supply in this range. e. Comment on the value of PED and PES. Explain what we can say about the demand and supply of apples from the calculated elasticity values. f. As an apple seller, should you increase or decrease the price of apples to increase your revenue?