a.) A tabloid reports that fish provides more nutrient than chicken.

Price
D0

S0

E0
P0 ------------------------------------P1---------------------------- E1

D1
Q1

Q0

Quantity

D0 and S0 represents the market demand and supply curve of the chicken
respectively. While P0 and Q0 represents the original equilibrium price and
quantity respectively. When the tabloid reports that fish provides more nutrient
than chicken, as a result; demand of chicken will drop as fish act as a substitute
good for chicken. So, the demand of fish will rise.
In this case, when the demand of chicken decreases, the demand curve will shift
leftward from D0 to D1 while the supply curve of the chicken remains constant.
When the curve shifts leftward, new equilibrium point is achieved at E1.
Consequently, the equilibrium price will decrease from P0 to P1 , while the
equilibrium quantity will decrease from Q0 to Q1 at the new equilibrium point.

b.) The price of beef falls (assuming beef and chicken are substitutes)
Price

D0

S0

D1

E0
P0--------------------------------------P1------------------------------- E1

Q1

Q0

Quantity

D0 and S0 represent the market demand and supply curve of the chicken
respectively. While P0 and Q0 represent the original equilibrium price and quantity
respectively. When the price of beef falls as a result, demand of chicken will drop
as beef act as a substitute good for chicken. So the demand for beef will rise.
In this case, when the demand of chicken decrease, the demand curve will shift
leftward from D0 to D1, while the supply curve of the chicken remain constant.
When the curve shift leftwards, new equilibrium point is achieved at
E1.Consequently, the equilibrium price will decrease from P0 to P1, while the
equilibrium quantity will decrease from Q0 to Q1 at the new equilibrium point.

C.) Consumers income decrease (assuming chicken is a normal good.)

Price

D0

S0

D1

P0 ------------------------------------- E0
P1 ------------------------------ E1

Q1

Q0

Quantity

D0 and S0 represent the market demand and supply curve of the chicken
respectively. While P0 and Q0 represent the original equilibrium price and quantity
respectively. When a consumers income decreases, the demand of chicken will
also decrease because in this case the chicken is assumed as a normal good.
When the demand of chicken decrease, the demand curve will shift leftward from
D0 to D1 while the supply curve of the chicken remain constant. When the curve
shift leftwards, new equilibrium point is achieved at E1.Consequently ,the
equilibrium price will decrease from P0 to P1, while the equilibrium quantity will
also decrease from Q0 to Q1 at the new equilibrium point.

d.) Consumers prefer to eat seafood instead of chicken.

Price
D0

S0

D1

E0
P0 -----------------------------------P1 ------------------------------ E1

Q1

Q0

Quantity

D0 and S0 represent the market demand and supply curve of the chicken
respectively. While P0 and Q0 represent the original equilibrium price and quantity
respectively. A change in consumers taste in which the consumers prefer to eat
seafood instead of chicken. Gradually, the demand of chicken will decrease.
When the demand of chicken decrease,the demand curve will shift leftward from
D0 to D1, while the supply curve of the chicken remain constant. When the curve
shift leftwards, new equilibrium point is achieved at E1.Consequently, the
equilibrium price will decrease from P0 to P1,while the equilibrium quantity will
also decrease from Q0 to Q1 at the new equilibrium point.

e.) Kentuckys promotion for rice and chicken meal has been very successful.

Price

D1
D0

S0

P1-------------------------------------------- E1
P0 ------------------------------------ E0

Q0

Q1

Quantity

D0 and S0 represent the market demand and supply curve of the chicken
respectively. While P0 and Q0 represent the original equilibrium price and quantity
respectively. In this case, as the promotion of the meal has been very successful so
the demand of chicken will eventually increase.
When the demand of chicken increase, the demand curve will shift rightward from
D0 to D1 while, the supply curve of the chicken remain constant. When the curve
shift rightwards , new equilibrium point is achieved at E1.Consequently ,the
equilibrium price will increase from P0 to P1,while the equilibrium quantity will
also increase from Q0 to Q1 at the new equilibrium point.

f.)

News reported that the chickens are affected by bird flu.

Price
D0

S0

D1

P0 ------------------------------------- E0
P1 ------------------------------ E1

Q1

Q0

Quantity

D0 and S0 represent the market demand and supply curve of the chicken
respectively. While P0 and Q0 represent the original equilibrium price and quantity
respectively. When the chicken is affected by flu, eventually the demand of
chicken will decrease.
When the demand of chicken decrease, the demand curve will move leftward from
D0 to D1 while, the supply curve of the chicken remain constant. When the curve
shift leftwards, new equilibrium point is achieved at E1.Consequently ,the
equilibrium price will decrease from P0 to P1,while the equilibrium quantity will
also decrease from Q0 to Q1 at the new equilibrium point.

a.)The demand and supply increased in equal magnitudes.

Price
D0

D1

S0

E0

S1

E1

P0-------------------------------------------------------

Q0

Q1

Quantity

When there is an increase in number of students in Seberang Perai Polytechnic and

at the same time the number of apartments in Permatang Pauh also increases. This
made the demand curve and supply curve to increase in equal magnitude.
S0 and D0 represents the supply and demand curve respectively, while P0 and Q0
represents the original equilibrium price and quantity. When the demand increases
as the number of students rises, the demand curve shifts rightward from D0 to D1.
Also, the supply increases as the number of apartment rises, the supply curve
moves rightward from S0 to S1. When both of the curve shift rightward from their
initial position, new market equilibrium point is achieved at E1. At the new
equilibrium point, the equilibrium price remains constant while the equilibrium
quantity increase from Q0 to Q1.
b.)Increase in demand greater than the increase in supply

Price

D1
D0

S0
S1

P1 ------------------------------------------- E1
P0 ------------------------------- E0

Q0

Q1

Quantity

When there is an increase in number of students in Seberang Perai Polytechnic and

at the same time the number of apartments in Permatang Pauh also increases. But
this time, the increase in demand is greater than the increase in supply. This made
the demand curve to increase 40% and the supply curve to increase 20%.

S0 and D0 represents the supply and demand curve respectively, while P0 and Q0
represents the original equilibrium price and quantity. When the demand increases,
the demand curve shifts rightward from D0 to D1. Also, the supply increases, the
supply curve shifts rightward from S0 to S1. When both of the curve shift
rightward from their initial position, new market equilibrium point is achieved at
E1. At the new equilibrium point, the equilibrium price increases from P0 to P1
while the equilibrium quantity increase from Q0 to Q1.

C.) Increase in demand smaller than the increase in supply

Price

D1
D0

S0
S1

P0 ----------------------------- -- E0

E1

P1

Q0

Q1

Quantity

When there is an increase in number of students in Seberang Perai Polytechnic

and at the same time the number of apartments in Permatang Pauh also increases.
But this time, the increase in demand is smaller than the increase in supply. This
made the demand curve to increase 20% and the supply curve to increase 40%.
S0 and D0 represents the supply and demand curve respectively, while P0 and Q0
represents the original equilibrium price and quantity. When the demand increases,
the demand curve shifts rightward from D0 to D1. Also, the supply increases, the
supply curve shift rightward from S0 to S1. When both of the curve shifts
rightward from their initial position, new market equilibrium point is achieved at
E1. At the new equilibrium point, the equilibrium price decreases from P0 to P1
while the equilibrium quantity increase from Q0 to Q1.

a) The demand and supply increased in equal magnitudes.

Price

S1
D0

D1

S0

P1--------------------------------- E1
P0--------------------------------

E0

Q0

Quantity

Syrian victims are facing starvations. So,because of that the demand for food is
increased. As a result ,the demand curve will shift rightward from D0 to D1,This
results an increase in both equilibrium price and quantity. In addition, the supply
curve will shift to leftward from S0 To S1,as the transportation are restraint. In this
case, both of the curve shifts equally, as a result new equilibrium point will
achieved at E0. At the new equilibrium point, quantity remains constant while
equilibrium price increases from P0 To P1.The change of the equilibrium is shown
as E0 To E1.

b) Increase in demand smaller than the decrease in supply

Price

S1
D0

D1

S0

P1 ---------------------------- E1
P0 ------------------------------- E0

Q1 Q0

Quantity

As Syrian victims are facing starvations, the demand for food will increase. And
the supply of food will decrease as the transports are restraint. But this time, the
increase in demand is smaller than the decrease in supply. This made the demand
curve to increase 20% and the supply curve to decrease 40%.
S0 and D0 represents the supply and demand curve respectively, while P0 and Q0
represents the original equilibrium price and quantity. When the demand increases,
the demand curve shifts rightward from D0 to D1. Also, when the supply
decreases, the supply curve shifts leftward from S0 to S1. When both of the curve
shifts from their initial position, new market equilibrium point is achieved at E1. At
the new equilibrium point, the equilibrium price increases from P0 to P1 while the
equilibrium quantity decrease from Q0 to Q1. The change of the equilibrium is
shown as E0 To E1.

c) Increase in demand greater than the decrease in supply

Price

D1

S1

D0

S0

P1 ---------------------------------- E1
P0 ------------------------------- E0

Q0

Q1

Quantity

As Syrian victims are facing starvations, the demand for food will increase. And
the supply of food will decrease as the transports are restraint. But this time, the
increase in demand is larger than the decrease in supply. This made the demand
curve to increase 40% and the supply curve to decrease 20%.
S0 and D0 represents the supply and demand curve respectively, while P0 and Q0
represents the original equilibrium price and quantity. When the demand increases,
the demand curve shifts rightward from D0 to D1. Also,when the supply decreases,
the supply curve moves leftward from S0 to S1. When both of the curve moves
from their initial position, new market equilibrium point is achieved at E1. At the
new equilibrium point, the equilibrium price increases from P0 to P1 while the
equilibrium quantity also increases from Q0 to Q1. The change of the equilibrium
is shown as E0 To E1.

COMMERCE DEPARTMENT
DPB1023 MICROECONOMICS
PROBLEM SCENARIO :
THE DEMAND SUPPLY THEORY AND MARKET EQUILIBRIUM
SESSION : DECEMBER 2015
PROGRAMME : DAT1B
LECTURER NAME : PUAN FARAH AZUA OTHMAN

NAMES:

MATRIC NUMBER

1.BAVITHIRAN A/L RINAGASAMY

10DAT15F2068

2. VARADAN A/L K RAJENDRAN

10DAT15F2067

3..NIREASHA A/P KAVIMANAN

10DAT15F2034

4.PAVITHRA A/P ANPUSELVAN

10DAT15F2036

Question 3
Due to the conflicts war in Syria, Syrian conflict victims were facing
starvation, at the same time the food aid cannot reach them because of
the restraint in the transportation network. Analyze how the following
events will affect the demand and supply of food in Syria.

Question 1
Illustrate each of the following events using a demand and supply
diagram for chicken. Explain the effect on equilibrium price and
quantity of chicken.

Question 2
Lets examine how the following events affect the demand and supply of
rented rooms in Permatang Pauh, Pulau Pinang .
There is an increase in the number of students in Seberang Perai
Polytechnic and the same time the number of apartments in Permatang
Pauh also increase.