Explain the effect of the following situations a Population

Explain the effect of the following situations:

               a. Population growth surges rapidly.

               b. The prices of resources used in the production of good X increase.

               c. The government is paying a $1-per unit subsidy for each unit of a good produced.

               d. The incomes of consumers of normal good X increase.

               e. The incomes of consumers of inferior good Y decrease.

f. Farmers are deciding what crop to plant and learn that the price of corn has fallen relative to the price of cotton.

Solution

a. With the increase in population the demand for goods increase and labor becomes cheap

b. When the input prices increase the price of the output increase and quantity supplied decreases

c. With the subsidy amount for producing a good increases the supply increases

d. The demand also increases

e. The demand decreases

f. Supply of cotton increases and corn decreases