Scenario: Before economic reforms were implemented in the countries of Eastern Europe, regulation held the price of bread substantially below equilibrium. When reforms were implemented, prices were deregulated and they rose dramatically. As a result, the quantity demanded for bread dramatically fell and the quantity supplied for supplied rose sharply. Change in Demand
Scenario: Before economic reforms were implemented in the countries of Eastern Europe, regulation held the price of bread substantially below equilibrium. When reforms were implemented, prices were deregulated and they rose dramatically. As a result, the quantity demanded for bread dramatically fell and the quantity supplied for supplied rose sharply. Change in Demand
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:For each of the following events described, indicate the effects to the demand and to the supply. Use the
demand and supply graphs provided below to match these events. Then determine what happens to the
market equilibrium price and equilibrium quantity.
Scenario: Before economic reforms were implemented in the countries of
Eastern Europe, regulation held the price of bread substantially below
equilibrium. When reforms were implemented, prices were deregulated and
they rose dramatically. As a result, the quantity demanded for bread
dramatically fell and the quantity supplied for supplied rose sharply.
Change in Demand*
Increase
Decrease
Did not Change
Indeterminate
Change in Supply*
Increase
Decrease
Did not Change
Indeterminate
Graph *
So
So
Do
Do
A
B
A
В
区区
So
P.
So
Do
D
D
S.
Do
Do
E
F
So
So
'D,
Do
Do
Q
G
H
G
So
S1
So
Do
Do
D1
Q
J
So
Do
D1
K
O K
Change in market equilibrium price. *
Increase
Decrease
O Did not Change
O Indeterminate
Change in market equilibrium quantity. *
Increase
Decrease
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