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Demand and Supply (Essay Sample)

Please answer the following question(s). To earn full points on this assignment submissions should include a well written response that clearly and concisely addresses and answers all parts of the question(s). Please use APA formatting, however please note your written response alone should be 2-4 pages doubled spaced typed (excluding title, header, name, page numbers etc.). Please cite references used in both the written response and a separate reference page. Please create and provide at least one original graph, I suggest hand drawing and submitting any graph(s) on paper for the brief assignment. However, if you create any graph(s) using software, please put a note under each graph that you create, saying that you created it and please state what software you used, so I know the graph is original. Include any graphs or charts at the end of your written response and refer to them in the text. Make sure you answer the topic question(s) from an economic perspective. Assume in a simple economic example that two changes occur simultaneously in an economy which produces some good called “Good X”. The first change that occurs is a decrease in the cost to produce “Good X”. The second change that occurs is an increase in the number of consumers who purchase “Good X”. Assume that this is a competitive market, what will happen to the equilibrium price and quantity of “Good X”? Use supply and demand analysis to demonstrate your answer and be sure to provide the rationale behind what is happening and also discuss any interesting observations or outcomes. Finally, please cite an example from the news of a current event in real life that relates to one of the changes (i.e. a decrease in the cost of production or an increase in the number of consumers) affecting “Good X” above, and be sure to explain why it relates. (Note: The magnitudes of any supply and/or demand shifts in this example are not specified; you may want to consider all possible scenarios). source..
Demand and Supply Student’s First Name, Middle Initial(s), Last Name Institutional Affiliation Course Number and Name Instructor’s Name and Title Assignment Due Date Demand and Supply In a competitive market, various factors such as taxes, subsidies, investment capacity, and changes in the cost of production affect supply. Separately, variables such as the prices of substitute or related goods, income, number of consumers, tastes, preferences, advertisements, and expectations of customers influence the demand for specific goods or services. In case there is a variation in either supply or demand, the equilibrium price and quantity are set to change. The events that cause alterations in demand and supply usually occur independently. In such instances, the impact may contribute to a rise in equilibrium price, accompanied by a fall in the equilibrium quantity. Alternatively, the change may lead to an increase in the equilibrium quantity and a decrease in the equilibrium price. In the presented hypothetical scenario, there is a decrease in the cost of production of Good X and an increase in the number of consumers who purchase the commodity. The first event, a decline in the expenses incurred when manufacturing the goods, will have a direct effect on supply. There will be an incentive for the producers to produce more goods and avail them to the market. The reason is that the firms will manage to increase the output due to the reduced operational expenses. In regards to an increase in the number of people who consume Good X, a direct effect on demand is expected. The implication of this phenomenon is that the producers may be motivated to hike the price since there will be numerous clients willing to buy the commodities. Since an increase in supply and demand for Good X are set to take place simultaneously, there are different outcomes that should be anticipated. First, if the growth in supply is equivalent to the expected surge in demand, the equilibrium quantity will rise while the equilibrium price will remain the same (see Chart 1). This is because there will be a proportionate shift in the demand and supply curves. Secondly, if the increase in demand surpasses the anticipated increase in supply, both the equilibrium quantity and price will tend to increase (see Chart 2). The reason for this is that the demand curve will shift rightwards. Such a change will be relative to the right shift of the supply curve. Finally, supply increases more than the rate at which the number of people willing to purchase a commodity, there will be a reduction in the equilibrium price while the the quantity will increase, as indicated in Chart 3. The rationale behind this is that the rightward shift of the supply curve will be greater than that of the demand curve, meaning the price will decline as the quantity increases. An example of an increase in the number of consumers buying a specific produc...
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