For each of the scenarios below, analyze how it will impact supply, demand, equilibrium price, and...

 

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For each of the scenarios below, analyze how it will impact supply, demand, equilibrium price, and equilibrium quantity for the good specified. For each, include the following components in the space provided: 1) The relevant determinant(s) and whether this increases or decreases supply or demand. 2) A graph showing the shift in the appropriate curve(s) and the change in equilibrium. 3) Specify what happens to the equilibrium price and quantity - specifically whether each increases, decreases, stays the same, or is indeterminate. Feel free to use shorthand (for example, arrows to indicate increases and decreases in P* and Q*). On each graph, be sure to label both axes, both curves, and equilibrium. a. Chips and guacamole are often consumed together. If the price of chips decreases, how will this impact the market for guacamole? b. Suppose that sellers expect the price of watches to increase in the future. How will this impact the market for watches? c. Suppose consumer income decreases and pizza is a normal good. At the same time, the price of cheese decreases. How will this impact the market for pizza? For each of the scenarios below, analyze how it will impact supply, demand, equilibrium price, and equilibrium quantity for the good specified. For each, include the following components in the space provided: 1) The relevant determinant(s) and whether this increases or decreases supply or demand. 2) A graph showing the shift in the appropriate curve(s) and the change in equilibrium. 3) Specify what happens to the equilibrium price and quantity - specifically whether each increases, decreases, stays the same, or is indeterminate. Feel free to use shorthand (for example, arrows to indicate increases and decreases in P* and Q*). On each graph, be sure to label both axes, both curves, and equilibrium. a. Chips and guacamole are often consumed together. If the price of chips decreases, how will this impact the market for guacamole? b. Suppose that sellers expect the price of watches to increase in the future. How will this impact the market for watches? c. Suppose consumer income decreases and pizza is a normal good. At the same time, the price of cheese decreases. How will this impact the market for pizza?

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a Chips and guacamole are complementary goods meaning they are consumed together If the price of chips decreases it will increase the demand for chips ... View the full answer