Directions: For each question, draw a market in equilibrium, labeling the initial equilibrium price and equilibrium quantity. Then shift the appropriate curve and label the new equilibrium price and equilibrium quantity. Next, fill in the blanks to describe what happened.
1. The price of a substitute for this good increases:
The equilibrium price will ______ and the equilibrium quantity will _____.
2. There is a decrease in income and this is a normal good:
The equilibrium price will _______ and the equilibrium quantity will _______.
3. There is a decrease in the price of a relevant resource used to produce this good:
The equilibrium price will ______ and the equilibrium quantity will _______.
4. There is a decrease in the number of sellers of this good:
The equilibrium price will ________ and the equilibrium quantity will _______.
5. Sellers expect the price of this good to fall in the future:
The equilibrium price will ______ and the equilibrium quantity will ________.
6. There is a decrease in taxes on producers of this good:
The equilibrium price will ________ and the equilibrium quantity will _______.
7. There is a decrease in preferences for this good:
The equilibrium price will ________ and the equilibrium quantity will ________.
8. There is an increase in the number of buyers of this good:
The equilibrium price will _______ and the equilibrium quantity will ________.
9. What will happen if buyers expect the price of this good to rise in the future and, at the same time, there is an improvement in the technology used to produce this good, and demand shifts by less than supply shifts?
The equilibrium price will _________ and the equilibrium quantity will ________.
10. What will happen if there is an increase in income and this is an inferior good and, at the same time, subsidies to producers rise, and demand and supply shift by equal amounts?
the equilibrium price will _______ and the equilibrium quantity will ________.