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Homework answers / question archive / This assignment focuses on demand, supply, and equilibrium

This assignment focuses on demand, supply, and equilibrium

Economics

This assignment focuses on demand, supply, and equilibrium. Let's start with the basics. Begin your essay by providing the following information.

  • Explain the difference between a movement along demand and supply curves and a shift of demand and supply curves.
  • What can cause the above situations? Provide an example for each.
  • Describe how equilibrium is found.
  • Describe how a shift of the demand or supply curve can affect equilibrium.

Now, select an industry with which you are familiar or one you would like to study. This industry will also be used in future assignments for this course.

After selecting your industry, identify a product or service that your chosen industry produces. Add the following information.

  • Define the current status of supply and demand for the product or service you identified.
  • Identify at least one factor that has caused the supply curve to shift for that product or service. 
  • Identify at least one factor that has caused the demand curve to shift for that product or service.

 

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Answer:

1) Demand curve and supply curve shows the relationship between price of a commodity and it's quantity which can either be quantity demanded or quantity supplied. Demand shows the negative relationship between price and quantity demanded. On the other hand, supply curve shows the positive relationship between price and quantity supplied. Movement along these curves means that the quantity of a commodity changed due to price of that commodity. On the other hand, shift in these curves shows that the quantity of the commodity changed due to change in the factors other than own price of a commodity.

2) Cause of movement along demand curve and supply curve is the change in the price of a commodity. On the other hand, shift in these curves can be caused by many factors such as change in the price of a substitute good will shift the demand curve and change in the price of inputs will cause shift in the supply curve.

3) Equilibrium in the market is found at a point where demand curve intersects the supply curve or demand is equal to the supply of a commodity.

4) A shift in demand curve to the right will change the equilibrium point where prices and quantity are higher than before. On the other hand, a rightward shift in the supply curve will lead to decrease in the equilibrium price of a commodity and an increase in the equilibrium quantity.

5) Industry chosen by me is the fast-food industry in which demand and supply both are elastic in nature. As a result, change in price will cause change in the quantity demanded and quantity supplied.

6) Change in the price of the input will cause a shift in the supply curve. For example, change in the price of flour.

7) Changes in food preference of peoples will cause a change in demand for a commodity or shift the demand curve of food products.