3. Over the past few years in the market for solar panels, we have seen lower prices and more panels being sold. a) Draw a supply-demand diagram for the market, showing the initial equilibrium price and quantity (indicated with P,*, Q* on the P and Q axes respectively.) b) What one curve (supply or demand) must have shifted, and in what direction, to cause both a decrease in price and an increase in quantity sold in the solar panel market? Illustrate this on your graph in part (a) (Show the new curve and the resulting new equilibrium price and quantity (indicated with P,*, Q,*.) c) Briefly describe two different events that might cause the shift you described above in the market for solar panels.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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8:37
( +92 349 3322246 A%26A3+ECON53...
d) Explain what the supply and demand model indicates
will happen to equilibrium price and
quantity in this market due to the event you described.
Does this make sense based on what you
know from living in markets your whole life?
1. Market: Commercial office space (Q is square footage of
rental office space, P is $ per sq footage rent.)
Event: The extensive work-from-home necessitated by
COVID-19 makes businesses realize that
many employees can be just as productive from
home and they don't need to require people
to be in the office always, or even often.
2. Market: Automobiles
Event:
Increase in steel tariffs, as we saw in 2018, raises
the price of steel used to make cars.
3. Over the past few years in the market for solar panels, we
have seen lower prices and more
panels being sold.
a) Draw a supply-demand diagram for the market, showing
the initial equilibrium price and
quantity (indicated with P,*, Q* on the P and Q axes
respectively.)
b) What one curve (supply or demand) must have shifted,
and in what direction, to cause both
a decrease in price and an increase in quantity sold in
the solar panel market? Illustrate this
on your graph in part (a) (Show the new curve and the
resulting new equilibrium price and
quantity (indicated with P,*, Q,*.)
c) Briefly describe two different events that might cause
the shift you described above in the
market for solar panels.
4. In market for gasoline, suppose the following two events
happen simultaneously
1) Continued ransomware attacks on major gas pipelines
or refineries, like the one last summer
(https://www.washingtonpost.com/business/2021/05/08/cyber-
attack-colonial-pipeline/)
regularly interrupt the refining of oil and the
distribution of gasoline.
2) Several mujor uuwm
Come Outwith neW.
Transcribed Image Text:8:37 ( +92 349 3322246 A%26A3+ECON53... d) Explain what the supply and demand model indicates will happen to equilibrium price and quantity in this market due to the event you described. Does this make sense based on what you know from living in markets your whole life? 1. Market: Commercial office space (Q is square footage of rental office space, P is $ per sq footage rent.) Event: The extensive work-from-home necessitated by COVID-19 makes businesses realize that many employees can be just as productive from home and they don't need to require people to be in the office always, or even often. 2. Market: Automobiles Event: Increase in steel tariffs, as we saw in 2018, raises the price of steel used to make cars. 3. Over the past few years in the market for solar panels, we have seen lower prices and more panels being sold. a) Draw a supply-demand diagram for the market, showing the initial equilibrium price and quantity (indicated with P,*, Q* on the P and Q axes respectively.) b) What one curve (supply or demand) must have shifted, and in what direction, to cause both a decrease in price and an increase in quantity sold in the solar panel market? Illustrate this on your graph in part (a) (Show the new curve and the resulting new equilibrium price and quantity (indicated with P,*, Q,*.) c) Briefly describe two different events that might cause the shift you described above in the market for solar panels. 4. In market for gasoline, suppose the following two events happen simultaneously 1) Continued ransomware attacks on major gas pipelines or refineries, like the one last summer (https://www.washingtonpost.com/business/2021/05/08/cyber- attack-colonial-pipeline/) regularly interrupt the refining of oil and the distribution of gasoline. 2) Several mujor uuwm Come Outwith neW.
Expert Solution
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Answer #3

The market supply curve of a commodity can shift as a result of a change in technology, input costs, government regulations, taxes and subsidies or with changes in weather conditions for agricultural products. 

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