Question

use clearly labelled diagrams to explain the effect to equilibrium price and quantity of good x if a) the cost of producing good x increased. b) the consumer income increased

Answer 1

Answer:

Explanation:

(Consumer income)

-If the income of the consumer increases that causes a change in the demand curve.

-The demand would increase making the demand curve shift outward.

-Meaning the demand curve would shift to the right side.

IMAGE NO. 1 SHOWS THE INCOME EFFECT

( cost of production )

-If the cost of producing the good increases

-It causes a change in the supply curve

-The supply curve would decrease, move inwards or to the left side.

-IMAGE 2 SHOWS THE COST OF PRODUCTION EFFECT