Illustrate the following incidents with a supply and demand graph indicating the change in...

Question

Illustrate the following incidents with a supply and demand graph indicating the change in equilibrium price and quantity. The market for ...A. oranges. Apples, a subsitiute, become more expensive.B. cars. Steel, an input good for cars, becomes cheaper as tariffs are repealed.
c. food. A small baby boom increases the population.
d. sneakers. Tire demand shifts to the right. Both tires and sneakers use rubber as an input.
e. gasoline: Drivers expect prices to become higher in the near future.
3) It has been
suggested that taxes should levied on junk food to discourage people eating it.
Illustrate with a supply and demand graph what the effect of a tax would be,
indicating the reduction in quantity, the revenue generated, the changes in
surplus, and the deadweight loss. Make sure your labels are specific. Is it
possible that this tax could ever have zero deadweight loss? Explain why or why
not.
4) Illustrate with a graph how the PPF presents a strong rationale for the plausibility of the law of supply.
	
Document Preview: 2) Illustrate the following incidents with supply and demand graphs indicating the change in equilibrium price and quantity. The market for...a. oranges. Apples, a substitute good, become more expensive.b. cars. Steel, an input good for cars, becomes cheaper as tariffs are repealed.c. food. A small baby boom increases the population.d. sneakers. Tire demand shifts to the right. Both tires and sneakers use rubber as aninput.e. gasoline: Drivers expect prices to become higher in the near future.3) It has been suggested that taxes should levied on junk food to discourage people eating it. Illustrate with a supply and demand graph what the effect of a tax would be, indicating the reduction in quantity, the revenue generated, the changes in surplus, and the deadweight loss. Make sure your labels are specific. Is it possible that this tax could ever have zero deadweight loss? Explain why or why not.4) Illustrate with a graph how the PPF presents a strong rationale for the plausibility of the law of supply.

David · Accepted Answer

2) Illustrate the following incidents with supply and demand graphs indicating the 
change in equilibrium price and quantity. The market for... 
a. oranges. Apples, a substitute good, become more expensive. 
Answer: 
When Apple becomes expensive, the demand for oranges will increase because it will 
become relatively cheaper now. As a result, demand curve for oranges would shift 
rightward (from DD1 to DD2).  Because of that, there will be rise in both equilibrium 
price and equilibrium quantity. [Refer figure1] 
Figure1:
b. cars. Steel, an input good for cars, becomes cheaper as tariffs are repealed. 
Answer: 
Cheaper steel would means decline the cost of production of Cars. This will increase the 
profitability of Car sellers at the current level of price and therefore they would like to 
supply more of cars at all levels of price, causing supply curve for Cars to shift rightward 
(from SS1 to SS2). As a result, equilibrium price of Cars will fall whereas equilibrium 
quantity of Cars will increase. [Refer figure2] 
Figure2:
c. food. A small baby boom increases the population. 
Answer: 
Due to increase in population, demand for food will increase at all levels of price, 
causing demand curve to shift rightward (from DD1 to DD2). As a result,

Illustrate the following incidents with a supply and demand graph indicating the change in equilibrium price and quantity. The market for ... A. oranges. Apples, a subsitiute, become more expensive....

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