Using both a written explanation and a graph, explain the effect of each of the following on the equilibrium price, P* and the equilibrium quantity, Q*, in a hypothetical market for basketball shoes. Draw a new graph for each question, starting with the original situation each time, and label your graphs completely.

#1: Basketball shoes become much more popular.

#2: It rains all summer long.

#3: Wages of shoe factory workers increase.

#4: The prices of leather and cotton fall.

#5: Basketball shoes become much more popular and wages of shoe factory workers increase

#6: Basketball shoes become much more popular and the prices of leather and cotton fall.

#7: It rains all summer and the prices of leather and cotton decrease.

#8: It rains all summer and there’s an increase in wages of shoe factory workers.

@jim_thompson5910 :)

Question

Using both a written explanation and a graph, explain the effect of each of the following on the equilibrium price, P* and the equilibrium quantity, Q*, in a hypothetical market for basketball shoes. Draw a new graph for each question, starting with the original situation each time, and label your graphs completely.

#1: Basketball shoes become much more popular.

#2: It rains all summer long.

#3: Wages of shoe factory workers increase.

#4: The prices of leather and cotton fall.

#5: Basketball shoes become much more popular and wages of shoe factory workers increase

#6: Basketball shoes become much more popular and the prices of leather and cotton fall.

#7: It rains all summer and the prices of leather and cotton decrease.

#8: It rains all summer and there’s an increase in wages of shoe factory workers.

@jim_thompson5910 :)

jim_thompson5910 · Answer

ok show me what you have so far

anonymous · Answer

okay.. so i don't know if it's right but start with #1?

so if basketball shoes become more popular that means there will be an increase in quantity demanded but because of all the demand, there is a decrease in quantity supplied? is that right? if so, is that the written explanation? or is there more to say about this in regards to explantations? :/

jim_thompson5910 · Answer

let's do the graph first

jim_thompson5910 · Answer

are you able to draw the initial graph?

anonymous · Answer

ermm not quite sure how to draw these graphs... :/ is it the same as earlier? like this? |dw:1414907118086:dw| except demand goes up and supply goes down? :/

jim_thompson5910 · Answer

no you have it backwards

jim_thompson5910 · Answer

as price goes up, demand goes down

anonymous · Answer

ohh okay darn it :(|dw:1414907294076:dw| so like this?

jim_thompson5910 · Answer

|dw:1414907264535:dw|

anonymous · Answer

ohhh okay:)

jim_thompson5910 · Answer

as price falls, demand rises

|dw:1414907336194:dw|

anonymous · Answer

so is this the graph we want for #1? since if basketball shoes get more popular, demand increases?

jim_thompson5910 · Answer

the relationship between price and quantity demanded is an inverse relationship (one goes up, the other goes down)

jim_thompson5910 · Answer

not quiet

jim_thompson5910 · Answer

quite*

jim_thompson5910 · Answer

ok so we have this graph here

|dw:1414907441414:dw|

jim_thompson5910 · Answer

with the equilibrium point

equilibrium price P*
equilibrium quantity Q*

|dw:1414907468043:dw|