University:
Indiana University South Bend
Course:
BUS-A 201 | Introduction to Financial Accounting
Academic year:

2023
Views:

360

Pages:

1
Author:

Rose G

SUPPLY DIMANDmicroeconomics4Assume (hat a competitive market is in equilibrium. what happens to theequilibrium when ( Show graphically and explain briefly)8Increase in (he price of a substitute goodIncrease in the price of a complement goodS'SPS'ASBASSBDBplBpp'CPPPPAApDD':DD0'DQQQQ0' QQ Q'0' QQ' QIf the price of good A increases the supply cureIf the price of good A increases, the supplyshifts left resulting in a higher price for lesscurve shifts left resulting in a highes pricequantity demanded. This leads to an increasefor less quantity demanded . This leadsin the demand of good 3, which shifts theto a decrease in the demand of good Bdemand curve right. The new equilibriumThe demand curve therefor shifts leftfor good A is now atBand for good BThe new equilibriums are now at8andDis now at DDecrease in marginal costPSs'Marginal cost is the change in total cost thatarises when the quantity produced isincremented by one unit.APIf marginal cost decrease. that means moreplBquantity can be produced for the same pricetherefor Shifting the supply curve rightDA new equilibrium clears at point B.