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Explain what happens to supply, price, and quantity when the following conditions occur: a
Explain what happens to supply, price, and quantity when the following conditions occur:
a. A new technology is developed to pick peaches
b. The government allows more furniture imports from China
c. Interest rates are lowered to help spur the economy
d. The cost of rubber which is used in the manufacturing of tires increases
e. The government imposes a tax in imports of foreign cars
Expert Solution
a. If a new technology should decrease the cost of production and shifts the supply curve right, decreasing price and increasing quantity.
b. If the government allows more imports the demand shifts left due to more competition. This decreases domestic prices and decreases quantity. Supply is unaffected.
c. If interest rates are lowered the cost of production decreases and shifts the supply curve right, decreasing price and increasing quantity.
d. If the cost of rubber increases the cost of producing tires increases and shifts the supply curve left, increasing price and decreasing quantity.
e. If the government imposes taxes on imports the demand curve shifts right because of increased demand, increasing prices and quantity.
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