Economics Supplementary Worksheet r363i

Economics Supplementary Worksheet Section B 1. Recently, Samsung Galaxy Note 7 is notorious for battery explosion. Show how the market of Galaxy Note 7 will be affected. Factor: (Decrease in) Quality of Goods/Unfavorable News When Galaxy Note 7 is notorious for battery explosion, the demand for Galaxy Note 7 decreases. The demand curve shifts to the left from D1 to D2. The equilibrium price decreases from P1 to P2. The equilibrium quantity decreases from Q1 to Q2. The new equilibrium is P2 and Q2. 2. Petroleum is said to be complement of cars. There is a reduction in the price of petroleum. Show how the market of cars will be affected. Factor: (Decrease in) Price of Complements When the price of petroleum decreases, the quantity demanded of petroleum increases. Since petroleum and cars are complements, the demand for car increases. The demand curve of car shifts to the right from D1 to D2. The equilibrium price increases from P1 to P2. The equilibrium quantity increases from Q1 to Q2. The new equilibrium is P2 and Q2. 3. To encourage the use of electricity cars, the government provides a unit subsidy to electricity car producers. Show how the market of electricity cars will be affected. Factor: (Grant of) subsidy The grant of unit subsidy to electricity car producers lowers the cost of production of electricity cars. This shifts the supply curve to its left from S1 to S2. The equilibrium price decreases from P1 to P2. The equilibrium quantity increases from Q1 to Q2. The new equilibrium is P2 and Q2. 4. The government lowers the excise duty on energy-efficient car. Show how the market of energy-efficient cars will be affected. Factor: Indirect Tax (Deduction) The reduction in indirect tax on energy-efficient cars lowers the cost of production of energy-efficient cars. This shifts the supply curve to its left from S1 to S2. The equilibrium price decreases from P1 to P2. The equilibrium quantity increases from Q1 to Q2. The new equilibrium is P2 and Q2. 5. ComeBuy drink is an inferior good to Ruby. Ruby enjoys a pay rise this month. Show how Ruby’s market of ComeBuy drinks will be affected. Factor: (Rise in) Income ComeBuy drink is an inferior good to Ruby. Inferior

good experiences a fall in demand with a rise in income. The reduction in Ruby’s income would reduce the demand for ComeBuy drinks. This shifts the demand curve to its left from D1 to D2. The equilibrium price decreases from P1 to P2. The equilibrium quantity decrease from Q1 to Q2. The new equilibrium is P2 and Q2. 6. There is an advancement of technology in the production of garment. Show how the market of garment will be affected. Factor: Advancement of Technology/Change in Technology The advancement in technology producers lowers the cost of production of garment. This shifts the supply curve to its left from S1 to S2. The equilibrium price decreases from P1 to P2. The equilibrium quantity increases from Q1 to Q2. The new equilibrium is P2 and Q2. 7. It is said that organic vegetables have significant health benefits. Show how the market of organic vegetables will be affected. Factor: Trend and Fashion Organic vegetables is said to have signification health benefits, it means there is a trend of eating organic vegetables for health. The demand for organic vegetables increases. The demand curve shifts to the right from D1 to D2. The equilibrium price increases from P1 to P2. The equilibrium quantity increases from Q1 to Q2. The new equilibrium is P2 and Q2.