Sadia Taskeen

ARID NO:5350
BSIT2A

INTRODUCTION TO ECONOMICS

SUMMITTED TO:SIR
MAJID KHAN
Q1:HOW WOULD EACH OF THE
FOLL0WING AFFACT THE
PAKISTSAN MSARKET SUPPLY
CURVE FOR CORN!
A.A new awhen there is a new nd Improved crop rotation technique is discovered.

b.The price of fertilizers falls.

c.The government offers new tax break to farmer.

ANS:SUPPLY CORVE REPRESENT the relationship b/w the quality supplied of a good or servive and
price.There are severals factors which cause shifts in supply curve while change in just price causes
movement along the supply curve.

(a).when there is a new and improved crop rotation technique then it will increase productivity of corn
crop and thus,will increase the supply of corn which will shift trhe supply curve to right.

(b).when there is fall is price of fertilizers which is used as raw materials by farmers in production of
corn.It is decrease the supply of corn which will shift the supply curve to right.

©.when government offers new tax break to farmer then there profit margin will increase or it can it
also as there is decrease the cost of production and it will increase the supply if corn which will shift the
supply curve to right.

QNO2:INDICATE HOW WOULD TOU THINK

EACH OF THE FOLLOWING DEMAND IN THE
INDICATED MARKET!
(a).Buyers in the market for pizza to herat desease.

(B).Buyers in the market of cds learn to increase the audiocassette.

©.Buyers in the markets for learn price.

ANS:(a).Buyers in the markets for pizza read a study linking hamburger consumption to heart desease.
(Demand shift right).
(b).Buyers in the market for learn of an increase price of audiocassette(a substitute for cds).(DEMAND
SHIFT RIGHT).

(C).Buyers in the market for cds learn of an increase in the price of CDS.(DEMAND SHIFT RIGHT).

QNO3:WHAT WILL HAPPEN TO THE

EQUILIBRUIM PRICE AND QUALITY OF ORANGES
IF THE WAGE PAID TO ORANGE PICKERS RISES!
ANS:Predict what will happen to the equilibrium price and quality of orange if the following event take
place.

(a).The price of grapefruit falls drastically.

(b).The wage paid to orange pickers rises.

(c).Exceptionally good weather provides a much greater than expected harvest.

Step-by-step solutions:
(a).Initially the market for oranges is in equilibrium .Recently a study finds that the consumption of
orange juice reduces the risk of heart desease.AS a result ,the demand for oranges rises in the
market..The demand curve shift right.

QNO4:HOW WILL AN INCREASE IN THE

BIRTHRATE AFFECT THE EQUILIBRUIM PRICE
OF LAND!

ANS:An increase in the birth rate will increase the population of potential buyers of land,and hence
shift the demand curve for land to the right,resulting in an increase in the equilibrium price of land.
QNO5:WHAT WILL HAPPEN TO THE EQUILIBRUIM PRICE AND
QUANTITY OF FISH IF FISH OILS ARE FOUND TO HELP PREVEVT
HEART DESEASE!
ANS:Fish oil prevent heart desease
The resulting change in preference will to a higher demand for fisth oil- hence an increase in
demand,and as a result an increase in equilibrium price and an increase in equilibrium in quantity.

The quantity supplied will of course increase as a result of the increase in price,but the supply does not
change at all.

QN06:What will happen to the equilibrium price and quantity of

beef if the price of chickenfeed increases!

ANS:Market interaction-chicken feed,price of

chicken,demand for beef
You have to think carefully about the market interaction in this problem.

An incresase the price of the chicken feed result in a rice of the cost of production of chicken, hencxe a
shift upwards I n the sup;y curved of chicken.The resulting equilibrium price of chicken will be higher;the
equilibrium quantity of will decrease.

Faced with higher prices of chicken at the supermarket,more consumer will choose substitute for
chicken-and the demand for beef will bew higher;trhe equilubruim quantity of beef will be lower.
QNO8:A survey indicated that chocolate is Pakistani is favourite
icecream flavor.for each the following
demand,supply,equilibrium of price and quantity of chocolate
icecream!

A. A severe drough In the central Punjab causes dairy farm to reduce causes.
B. A new by the medical association reveals that chocolate does in fact health benefits.
C. The discovery of cheaper synthetics flavor vanilla icecream.
D. New technology of mixing and freezi ng icecream producing chocolate icecream.

ANS:A survive indicated chocolate chocolate is American favourite icecream

flavor. For each of the following ,indicate the possible effacts on demand ,por
supply or both as well as equipment price and quantity of chocolate icecream.
A. A server drought in the Midwest causes Dairy farmers to reduce the milk of
milk producing cattle in their herds by a third.These dairy farmers supply
cream that is used to manufacture chocolate icecream.
1)In decreasing their herds dairyu farmers decreased the supply of icecream
which result in a left ward shift of the supply curve for icecream.
Eventually, this leads to an increase in the equilibrium price and a decrease in
the equilubruim quantity rise.
B. A new report by the American medicals association reveals that chocolate
does .in fact have significant health benefits.,
1).Consumers will demand morew chocolate icecream at a given price.This will
cause a rightwotrd shift of the demand curve.
 C. The discovery of cheaper synthetics vanilla flavourring lowers the prince of
vanilla icecream.
1). The price of the substitute decreased ,therefore the consumers are willing
to substitute for chpocolate ICECREAM. The demand for chocolate icecream
decrease ,which causes a left word shift of the denmand curve.
Both equibruim price and quantity decrease.
C. New technology for mixing and freezing icecream lower manufacture cost
of producing chocolate icecream.
1). Due to cost of producing icecream decrease manufacture are willing supply
more units of chocolate icecream at any given price. This cause a roightword shift
of the supply curved and result in a decrease in the equilibrium price and an
increase in equilibrium quantity.

QNO9:Show a diagram afffact on the diamond curve, the suppy

curve equilibrium price and equilibrium quantity!

a.The market for newpaper in your own town

CASE1.The salaries of journalist go up.
CASE2.There is a big news evevt in your own town which is reported in the
newpapers.
b.The market for the krugman and wells economics textbook
CASE1. Your professor makes it required reading for all of his of her student.
CASE2.Printing costs for textbooks are lowered by the use of synthetic paper.
ANS:THE MARKET FOR NEWPAPER
CASE1:Journalists are an input in the production of newpapers; an increase in
their salaries will cause newpaprs publishers to reduce the quantity supply at any
given price.This represent a leftward shift of the supply curved from s1 to s2 and
result in a rise in the equilibrium price and a fall in the equilibrium quantity as the
equilibrium changes from E1 to E2.
CASE 2: Townspeople will wish to purchase more newpapers at any given
price.This represent a rightwards shift of the demand curve from D1 to D2 and
leads to a rise in both the equiulibruim price and quality as the equilibrium
changes from E1 to E2.

THE MARKET FOR THE KRUGMAN:

CASE1:A greater quality of textbooks will be demanded at any given price
representing a rightward shift of the demand curve from D1 to D2 .Equilibruim
prices and quantity will rice as the equilibrium changes from E1 TO E2.
CASE2: The textbook publishers will offer more textbook for sale at any given
price representing a rightward shift of the supply curve from S1 to S2 .Equilibruim
will fall and equilibrium quantity will rise as the equiliubruim changes from E1 to
E2.

JAZAKALLLAH..