Price of substitute good falls – As seen on the diagram above when price of substitute product A rise, then demand for substitute product B rises accordingly. Positive relationship between the two. Shift to the right. B) Taste shifts away from the good – Whew the taste shifts away from the good it becomes less desirable, making its demand for it decrease. Shift to the left. C) Price of complimentary good falls – When the price of a complementary good falls that demand for the product as well s its complementary go up.
Shift to the right. D) Good become more expensive – When a good becomes more expensive then the demand for it will decrease. Shift to the left. By Rosenthal a) Cost of production for a good falls – When the cost of production become cheaper then supply goes up. Shift to the right. B) Alliterative products become more profitable – When alternative products become more profitable then suppliers stop using the less profitable products. Shift to the left. C) Price of good rises – When the price off good rises the supply rises with it. Shift to the right. ) Firms anticipate that the price of a good will fall to supply more of the product now. Question 3: a) People consume less bread – There will be a decrease in quantity demanded. B) Discovery off new cheaper way of milling flour –the new discovery of a new cheaper way of milling flour may encourage new suppliers to mill flour or it may encourage existing suppliers to mill more flour. All in all there’s an increase in supply. C) Price of other grains of rise – Others grains of rise work as substitute goods so if there price goes up then emend for them will decrease, and if their price falls the demand for them will increase.
Question 4: a) Equilibrium price is $280 b) For the price that the ceiling is set at there is more demand than there is at the equilibrium price. There is also less supply than there is at the equilibrium price. Therefore we have a shortage. C) New figures Price per tone Tones demanded per week Tones supplied (old) 225 300 1 oho 1300 Tones supplied (new) 375 450 1150 1450 d) New equilibrium $240. There will be 50 more tones sold. Question 5: ) Petrol (all brands), Sees petrol – Both are inelastic.
Petrol is a necessity in our life so if the prices rises the quantity doesn’t go down much. Holiday abroad Bread – Holidays abroad have more elastic demand than bread. Bread is used on a daily basis so if the price rises, quantity goes down by a little. With holiday abroad on the other hand the price and demand for it change bass on the seasons. C) Salt, clothing Clothing salt – Clothing have more elastic demand than Salt. Salt is used on a daily basis so if the price rises, quantity goes down by a little. With Clothing on the other hand the price ND demand for it change bass on the seasons, as well as our wages.