Question: 1. Assume the market for jeans is perfectly competitive. For each of the following situations usethe methodology of comparative statics to draw the graph to illustrate the likely effect on thejeans market. Label graphs completely, showing the initial equilibrium price and quantity and thenew equilibrium price and quantity. (Four graphs are required. One graph for part a; one graphfor part b; one graph for part c; and one graph for part d.)
a. There is an increase in household income. (Specify the category of the product,normal or inferior, in your answer.
b. There is a decrease in the price of sweat pants. (Specify the nature of the relationshipbetween jeans and sweat pants in your answer.)
c. There is a decrease in the price of denim.
d. The following two events occur at the same time. What is the overall impact of thesetwo events on price and quantity?
1. Consumers expect the price of jeans will be higher next month.
2. There is technological innovation in the production of jeans