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1) Consider the market for new textbooks . For each of the events listed below, draw a diagram separately to show the effect on the price and quantity of new textbooks. Please state exactly what will...

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1) Consider the market for new textbooks. For each of the events listed below, draw a diagram separately to show the effect on the price and quantity of new textbooks. Please state exactly what will happen to the equilibrium price and quantity. Remember that it is important to identify which side of the market (demand or supply) is affected and what is direction of the shift. Please be clear in your answers.

a) More students attend colleges.

b) Paper becomes more expensive.

c) More used textbooks are available in the market at lower price.

d) Textbook authors accept lower royalties.

e) As the result of pandemic many students lose their part time jobs.

Answered Same Day Apr 16, 2021

Solution

Komalavalli answered on Apr 16 2021
151 Votes
New textbook Market:
The above graph shows the new textbooks with upward sloping supply curve (s) and downward sloping demand curve (d), The market is equili
ium at a point where demand and supply meets and the equili
ium level of price is P* and quantity of new is Q*.
a)
More students attend college:
If more students attend the college, the demand for new textbooks will increase and shifts the demand curve to the right of old demand curve D.
The demand curve shifts to the right of old demand curve D. Due to excess demand for new textbooks in the market the price will go up from P* to P1 and quantity of New textbooks increases from Q* to Q1 with new demand curve D1.Therefore the market equili
ium for new textbooks will be at E1 with more students attend college, the resulting price will be P1 and quantity will be Q1.
) Paper becomes more expensive.
When paper becomes more expensive, the producers of new textbook will produce less and this has negative impact on supply of new textbook.
The supply curve shifts to the left of old supply curve S when producers of new textbooks...
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