Krugman's Economics For The Ap® Course
3rd Edition
ISBN: 9781319113278
Author: David Anderson, Margaret Ray
Publisher: Worth Publishers
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Question
Chapter 7, Problem 2CYU
To determine
The question requires us to determine the impact of the given events on the demand and supply curve, and on the equilibrium quantity and
Expert Solution & Answer
Explanation of Solution
The given options are:
- A fall in the
price of gasoline leads to a higher supply of large cars. A higher supply of cars shifts the supply curve to the right and causes the equilibrium price to fall and the equilibrium quantity to increase in the market for cars. - A technological innovation reduces the costs of production and thus encourages the producers to supply more. A higher supply of paper shifts the supply curve to the right and causes the equilibrium price to fall and the equilibrium quantity to increase in the market for paper.
- A fall in the price of movie-streaming services increases the demand for such services. A higher demand shifts the demand curve to the right and causes both the equilibrium price and equilibrium quantity to increase.
Economics Concept Introduction
The following table represents the changes in equilibrium quantity and equilibrium price when demand and supply change:
Factors | Equilibrium quantity | Equilibrium price |
Increase in demand | Increase | Increase |
Decrease in demand | Decrease | Decrease |
Increase in supply | Increase | Decrease |
Decrease in supply | Decrease | Increase |
Chapter 7 Solutions
Krugman's Economics For The Ap® Course
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