The above reflects the shortrun supply and demand for jelly

The above reflects the short-run supply and demand for jelly... which is a normal good. Which graph best captures the following:

a) The government taxes the production of jelly

b) Government begins to subsidize the production of peanut butter (peanut butter and jelly sandwiches are very popular)

Graph 6

The above reflects the short-run supply and demand for jelly... which is a normal good. Which graph best captures the following:

a) The price of peanut butter rises (peanut butter and jelly sandwiches are VERY popular)

b) Government begins to subsidize the production of jelly

Graph 8

A minimum wage is a price floor on wages - we will more closely consider the issue at the end of the quarter. But we can already extend the discussion on price floors we read about to this one ... Politicians may like the idea of a minimum wage because:

It is easy to target the assistance to families of different sizes.

A rise in wages paid to workers in a pencil factory will result in:

a fall in pencil supply and demand - which means a fall in quantity with the change in price not determined.

If both supply and demand rise then:

Graph 7

Graph 5 Graph 6 Price Price Q,?Q Quantity QQuantity Graph 7 Graph 8 Price Price Q,?Q Quantity Q, Quantity

Solution

5. Graph 5

Subsidy on the production of good increases its supply. So, supply curve shifts rightwards. When government levied tax then price of jelly increases which reduces demand of commodity. As a result, demand curve shifts leftwards.

6. Graph 5

Sandwich and butter are complementary goods. Increase in price of butter decreases demand of Jelly sandwich which shifts demand curve leftwards.

7. a fall in the pencil supply curve and therefore an increase in price and a fall in quantity demanded.

Increase in wage increases cost of production of firms so supply of commodity decreases and price of commodity increases. Increase in the price causes decrease in the quantity demanded.

8. quantity will rise but the change in price cannnot be determined.

Increase in demand and supply increases equilibrium but change in price is ambiguous because it depends upon the magnitude of shift of demand and supply curve.