Increase in the equilibrium price and a decrease in equilibrium quantity of the
ID: 1224748 • Letter: I
Question
Increase in the equilibrium price and a decrease in equilibrium quantity of the products made with eggs,consider the effect of that price change on the market for items such as mayonnaise, salad dressing and cake mixes, for which eggs are a key ingredient.
1. Which demand and/or supply determinant(s) for these products is/are affected?
2. What would be the effect, i.e., direction of change, on the demand and supply of these products?
3. What would be the effects, i.e., direction of change, of this event, ceteris paribus, on the equilibrium price and quantity of these products?
4. What would be the effect of this event, ceteris paribus, on the profits of firms in these industries?
consider the effect of that price change on the market for bacon.
1. Which bacon demand and/or supply determinant(s) is/are affected?
2. What would be the effect on the demand and supply of bacon?
3. What would be the effects of this event, ceteris paribus, on the equilibrium price and quantity of bacon?
4. What would be the effect of this event, ceteris paribus, on the profits of firms in this industry?
consider the effect of that price change on the market for breakfast cereal.
1. Which cereal demand and/or supply determinant(s) is/are affected?
2. What would be the effect on the demand and supply of cereal?
3. What would be the effects of this event, ceteris paribus, on the equilibrium price and quantity of cereal?
4. What would be the effect of this event, ceteris paribus, on the profits of firms in the cereal industry?
Explanation / Answer
1. supply determinant for these products are affected as egg is the key ingredient
2. With increase in price of eggs, would make these products costly. At same price, supply of these products would decrease
3. Price would increase and qunatity would decrease
4. Profits of firms would increase