Question

Relfler to the dagram dsplaying the market for Gourmet Coffee to the right The lines S, and Do represent onginal supply and demand relanonships Point A is the onginal pont of equitbrium. The lines S, and Di represent cutward (rigntward) shifs. The Iines 82 and D represent 00- nward (leftward) shits Read the following shock or pair of shocks Use the pone drawing foor to identify the new point of equnbrium Label this new point Shockisy: S1 A. A decline in consumer income (a normal good) D1 More firms competing in the market Caretuty toiow me in5ธา ctions above, and oray draw me requred 00 ects As a resun, the equiliorium price wil As a result, the equibrium quantty w o20 0 407o 80 90 T Quanty (per week)

Answer 1

in the graph first the demand curve and the supply curve shifts rightword and the new demand and supply curve are D1 and S1 respectively. again the demand and supply curve shifts to left word and the new demand and supply curve is D2, S2 and they intersect with each other at B where the new equilibrium is established. so the price here will be 50 and quantity demanded will be 30 units. as a result of decrease in demand the price would have been fallen but the supply of the good also fell so here is no change in the equilibrium price. only equilibrium quantity has been changed here.