Asked by Frank sweet II on May 14, 2024
Verified
This comes from an actual newspaper story.The average price of a home in W County rose more than 12% last year but the number of sales fell nearly 15%.Its the old law of supply and demand, said a spokesman for the Board of Realtors.The number of sales is down because there's a higher demand for properties but there isn't a corresponding number to sell.
a.What does the old law of supply and demand predict would happen to price and quantity if the demand curve shifts outward and the supply curve does not change?
b.Draw a diagram to illustrate the case of a shift in demand and/or supply curves that is consistent with the observed change in prices and quantities.
Demand Curve
A graphical representation of the relationship between the price of a good and the quantity demanded by consumers in a given time period.
Supply Curve
A supply curve graphically represents the relationship between the price of a good and the quantity of the good that suppliers are willing to sell, typically showing a direct relationship where higher prices incentivize higher supply.
- Understand the demand and supply dynamics in markets and their impact on pricing and quantity.
- Explain the effects of supply and demand shifts on market equilibrium.
Verified Answer
b.One simple case would be a leftward shift in the supply curve and no change in the demand curve.
Learning Objectives
- Understand the demand and supply dynamics in markets and their impact on pricing and quantity.
- Explain the effects of supply and demand shifts on market equilibrium.
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