II, Distingishing Changes in Demand from Changes in Supply It is importánt that
ID: 1137637 • Letter: I
Question
II, Distingishing Changes in Demand from Changes in Supply It is importánt that you be able to distinguish between factors that affect demand and factors that affect supply. Place a D next to items that are determinants of demand and an S next to items that affect supply. 2. income -3. exchange rates 4. changes in tochnology . prices of substitutes in production 6 prices of related goods 7, gumber of gellers 8. tastes 9. prices of complements 10. consumers' expectations 11. number of buyers 12. changes in productivity 13. prices of resources 14. prices of substitutes in consumption IV. The Market for Battery-Operated Dancing Flowers For each event below, indicate whether it affects the demand or supply of báttery-operated dancing flowers, and the direction (increase or decrease) of the change. Also indicate what will happen to equilibrium pricé and quantity. Remember, the determinaits of demand are income; tastes, prices of related goods or services, consumers' expectations, number of buyers, and exchange rates. The determinants of súpply are prices of resources, changes in technology or productivity, producers expectations, number of producers, and prices of related goods or servjces (goods that are substitutes in production). L. There is a change In tastes toward battery-operated dancing gorillas. 2. The price of plastic falls. an , , x. 3. A technological breakthrough makes it cheaper to produce plastic Howers 4. Consumers' incomes rise. 5. The price of battery-operated dancing gorillas rises. 6. The price of plastic for making flowers skyrockets TA fire destroy sa major production facility for danç g flowers ,,el.:Explanation / Answer
Answer - We have identified the factors which affect demand and supply.
(1) Producer's expectation will affect supply of product in the market. This is the factor which can change supply in the market.
(2) Income affects demand of product in the market. Consumers income is very important factor of demand.
(3) Exchange rate would affect supply product is the market. Exchange rate determines the how much quantity of product would be exported or imported in the domestic market which affects supply in domestic market.
(4) Change in technology is the determinant of supply. Change in technology affect significantly supply of the product. Technological advancement will increase supply and vice versa.
(5) Price of substitute in production will affect supply of the product in the market.
(6) Price of related goods are factor which affect demand of the product. Price of substitute good and price of complementary goods affect demand very much.
(7) Number of sellers would affect supply in the market. This is the a very important determinant of supply of the product. As much sellers are available in the market that much supply of the product will be available.
(8) Tastes are the factor of demand. Taste of the consumer affect demand of the product. Fashion, trend, eating habits, etc. can affect demand.
(9) Price of complement goods affect demand. Product's demand goes up if price of complement good falls.
(10) Consumers expectations affect demand. This is very important factor which affect present behavior of the consumer in the market. Future price rise expectation of the of the good may increase demand in present time.
(11) Number of buyers is the determinant of demand. More buyers will create high demand of the product in the market.
(12) Change in productivity is the determinant of supply. Change in productivity can shift supply curve upward or downward.
(13) Price of resources are the factor that affects supply of goods and services in the market. Price of resources are primary cause for cost of production. Thus, it affects supply very much.
(14) Price of substitute in consumption affect demand. If price of a substitute good goes down then demand for the product goes down also and vice versa.