Task: Analytical Questions for DISCUSSION Economics and Management
Problem 1) For each of the following changes, state what will happen to market equilibrium price and quantity in the short run. (Use the demand curve)
a. Consumers expect that the price of the good will be higher in the future.
b. The price of a substitute good rises.
c. Consumer incomes fall, and the good is normal.
d. Consumer incomes fall, and the good is inferior.
e. A medical report is published showing that this product is hazardous to your health.
f. The price of the product rises.
Problem 2) For each of the following changes, state what will happen to market equilibrium price and quantity in the short run. (Use the supply curve)
a. The government requires pollution control filters that raise production costs.
b. Wages of workers in this industry fall.
c. There is an improvement in technology.
d. The price of the product falls.
e. Producers expect that the price of the product will fall in the future.
Problem 3) Demand is given by: QD = 6000 - 50P, Domestic supply is: QS = 25P, and Foreign producers can supply any quantity at a price of $40.
a. If foreign producers can sell in the domestic market, what is the equilibrium price? What is the equilibrium quantity? How much is sold by domestic and foreign producers, respectively?
b. Under domestic government pressure, foreign producers voluntarily agree to restrict their goods. What will happen to the price and quantity? What will happen to the amount that domestic producers supply? What will happen to revenues of domestic and foreign producers?