In the market for bicycles, explain what happens to the supply and demand curves when there is an increase in the price of steel used to make bikes
What will be an ideal response?
An increase in the price of steel is an increase in the price of a resource used to make the good. As a result, the supply of bicycles decreases and the supply curve shifts leftward. There is no change to the demand, so the demand curve does not shift. The equilibrium price of a bicycle rises and the equilibrium quantity decreases.
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When the amount of output is such that marginal social benefit exceeds marginal social cost, then to reach the efficient quantity
A) production should be increased. B) production should be decreased. C) production should remain constant. D) More information is needed to determine if production should be increased, decreased, or not changed.
If a larger percentage of Americans attended college, the wage premium would probably
a. continue rising. b. continue falling. c. rise. d. fall.