Econ 1580 Learning Journal Unit 2 PDF

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Econ 1580 Learning Journal Unit 2...

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A supply-demand graph can be described as having a demand curve that begins in the upper left and slopes downward to the lower right; and having a supply curve that begins in the lower left and slopes upward to the upper right. Using words in a narrative, please describe and explain how both the equilibrium price and quantity will change when: a) Only supply decreases b) Only supply increases c) Only demand increases d) Only demand decreases a) Only supply decreases When there’s only supply decrease,it will shift the supply curve to the left. Therefore, it will cause the equilibrium price to surge and the equilibrium quantity to decrease for a good or service. There are some factors that can cause the supply to decrease, for example, poor natural conditions for production and higher production costs b) Only supply increases When the supply increases, it will shift the supply curve to the right. Therefore, it will cause a decreasing of the equilibrium price and increase the quantity demand of goods or services.This does not shift the demand curve, but movement along the demand curve will occur to the right. But once the price falls to a new equilibrium level, the quantity demanded will increase. The reason that will cause the supply increases, including improved technology, lower taxes, and higher government subsidies. c) Only demand increases Once the demand increases, the demand curve will shift to the right, the equilibrium price will increase and the quantity will increase at the same time. The reason that may cause demand to increase is that changes in preferences. a rise in income may be the factor that cost demand increases. d) Only demand decreases Once the demand decreases, the demand curve will shift to the left. As a result, it will decrease the equilibrium price and decrease the quantity supplied of that good or service at the same time. The reason why the demand decreases is that the income of the customers has fallen. Once they have less income, they will have less desire to spend money on stuff....