Question

Assuming hypothetical equilibrium in Demand/Supply Model of Apples, illustrate impact of following events: A. Suppose the Doctors recommend eating Apples every morning. (0.5 Marks) B. The Monsoon rains adversely affect the Apple Harvest. (0.5 Marks) C. The government announces increase in Wages of workers. (0.5 Marks) D. The price of petrol in the market comes down. (0.5 Marks E. Consumers Income falls during government imposed Lockdowns due to health concerns. (0.5 Marks)

Answer 1

Answer:

hi

Explanation:

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Answer 2

The answers are given as follows:

Explanation:

A.

• If the Doctors recommended people to eat apples every morning, it will result in a rise in the demand for apples causing the equilibrium price for apples to increase.

B.

• If the monsoon rains adversely affected the apple harvest, there will be a reduction in the supply of apples due to the lower yield causing the equilibrium price for apples to rise.

C.

• If the government announces an increase in wages of workers, it will lead to an escalation in the demand for apples due to the rise in the income levels leading to an increase in the equilibrium price of apples.

D.

• If the petrol prices in the market come down, it will lead to a rise in supply for apples as their transportation to the market will be cheaper causing the equilibrium price of apples in the market to drop.

E.

• If the consumer’s earnings fall during government-imposed lockdowns, it will give rise to a fall in the demand for apples due to the low income that will lead to a decrease in the equilibrium price of apples.