Question

You are in a market for Wrigley's double-mint gum. Graph old and new demand/supply curves plus shifts, equilibrium price and quantity for each scenario. Shift suitable curve(s), describe how shocks shift curve(s) and state changes in equilibrium.

1. Let’s say price for main ingredients peppermint increases due to a disease at peppermint farms.

2. A machine is developed for automation of double mint gum production. The government rises federal income tax.

3. Leonardo DiCaprio promotes for Wrigley's double-mint gum. He likes that gum so much that he decides to produce and sell the “DiCaprio Gum” through his own business.

4. The price of Juicy-Fruit-Chewing gum increases.

Answer 1