Directions: Based on the given “news event”, show the impact on the given market

Question

Directions: Based on the given “news event”, show the impact on the given market and the effect (increase or decrease) on the equilibrium price and quantity, ceteris paribus (holding all other relevant variables constant). Be sure to distinguish between a price effect (movement along a demand or supply curve) and other factors that influence supply and demand (shifts of supply and demand curves). Label equilibrium prices and quantities both before and after the effect of each news event on the appropriate axis

Explanation / Answer

10.

Demand will fall

Demand curve will shift to the left

11.

Movement along the demand curve to the left

12.

Demand supply forces work with each other to reach equilibrium

13.

Leftward movement along the supply curve.

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