Q.1 For each of the following events, assume that either the supply curve or the
ID: 1207593 • Letter: Q
Question
Q.1 For each of the following events, assume that either the supply curve or the demand curve (not both shifted). Explain which curve shifted and indicate the direction of the shift.
a. Housing prices are rising but more houses are sold.
b. Australian Airlines reduces its average plane fare by 30 percent in order to attract more customers
c. From 1950 to 1979 the wages paid to fruit pickers increased while the number of fruit pickers employed decreased.
d. During the same period the price of radio sets declined, while the number of radio sets purchased increased.
Explanation / Answer
(a) Demand curve has shifted rightward.
An increase in demand will shift the demand curve rightward, resulting in increase in both price and quantity sold.
(b) Supply curve shifts right
A rightward shift in supply will lower price and raise quantity.
(c) Labor supply curve shifted leftward
When labor supplied falls, the suply curve shifts leftward causing higher wage rate & lower number of workers.
(d) Supply curve shifted rightward.
A rightward shift in supply will lower price and raise quantity.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.