The computer market in recent years has seen many more...

Name: Problem 54, Chapter 3: Principles of Macroeconomics
Uploaded: 2021-02-18T03:09:27-08:00
Duration: 7 min 6 s
Channel: Oluwadamilola Ameobi
Description: The computer market in recent years has seen many more computers sell at much lower prices. What shift in demand or supply is most likely to explain this outcome? Sketch a demand and supply diagram and explain your reasoning for each. a. A rise in demand b. A fall in demand c. A rise in supply d. A fall in supply

The computer market in recent years has seen many more computers sell at much lower prices. What shift in demand or supply is most likely to explain this outcome? Sketch a demand and supply diagram and explain your reasoning for each. a. A rise in demand b. A fall in demand c. A rise in supply d. A fall in supply

The computer market in recent years has seen many more computers sell at much lower prices. What shift in demand or supply is most likely to explain this outcome? Sketch a demand and supply diagram and explain your reasoning for each.
a. A rise in demand
b. A fall in demand
c. A rise in supply
d. A fall in supply

Key Concepts

Shifts in Supply

A shift in the supply curve occurs when a non-price determinant of supply, such as production technology or input costs, changes. An increase in supply is represented by a rightward shift in the supply curve and typically leads to a lower equilibrium price and a higher quantity sold in the market.

Shifts in Demand

A shift in the demand curve happens when non-price factors such as consumer income, preferences, or prices of related goods change. A rightward shift signifies higher demand, while a leftward shift indicates lower demand. These shifts can alter the equilibrium price and quantity independently of supply changes.

Supply and Demand Model

This model provides a fundamental framework for understanding how prices and quantities are determined in a market. It explains that the interaction between the supply curve (seller behavior) and the demand curve (buyer behavior) establishes the market equilibrium, where the quantity supplied equals the quantity demanded.

Market Equilibrium

Market equilibrium is the point where the demand and supply curves intersect, indicating the price and quantity at which the market clears. When either the demand or supply curve shifts, the equilibrium changes, affecting both the price and quantity in the market.

Transcript

00:01 So the computer markets in recent years have seen many more computers sell at much lower prices and what shift in demand of supply is most likely to explain this outcome or what is sketch a demand or supply diagram and explain the reasoning for each.

00:16 So the first one is a rise in demand.

00:22 So the sketch for a rise in demand will look like this.

00:38 And this side is the quantity of the computers.

00:49 And this side is the price.

00:50 Of computers and then we have p and then we have p one and then we have q and then we have q one so the point where the um p sorry the point where p and q meets is going to be equilibrium and then it's going to take this so this is e and then this is e1 and then this is the supply curve and then d is d right here this is d this is d right here this is d and then d1 is right here and then this is d1 so this is what the sketch for a rise in demand should look like so so as you can see from the diagram on the diagram we just drew is the equilibrium right here where the demands and supply curve meets um intersect each other and this is the s and the rights for demand for computer will shift the demand curve right for from d to d1 as you can see and the price will increase from p to p1 and equilibrium we increase from um equilibrium quantity we increase from q to q1 so that's for that now the second one is the sketch for a fall in demand now for a fall in demand the sketch should look like this and this is the quantity of computers so that we have q1 and we have q and it's a fall in demand so p1 is here p is here just p and then this is the price of computer this quantity so q p1 and q1 will meet at the point and then p and q will meet so the point where both of them meets right here so this is the equilibrium one and then this is the equilibrium right here and this is supply so as you can say the price is falling down and the demand is and the quantity is going down.

03:29 So the point right here is going to, sorry.

03:43 So this is d1 and then d is right here.

03:50 So this is what the graph looks like.

03:51 And from here we can see that e is the original equilibrium, where the demand, or this is e1, where the demand and supply curve s intersect each other...

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