E-cigarettes. Multiple credible reports are published detailing the adverse health effects of e- cigarettes (vaping). This is new information: the e-cig industry had been basing its advertising around alleged health benefits of e-cigarettes over tobacco products. What is the effect on the price of e- cigarettes? On the quantity of e-cigarettes sold per month? (E-cigarettes are market) Step 1. Draw demand and supply curves showing the market before the economic change took place. Using this diagram, find the initial equilibrium values for price and quantity. Step 2. Decide whether the economic change being analyzed affects demand or supply. In other words, does the event refer to something in the list of demand shift variables or supply shift variables? Step 3. Determine whether the effect on demand or supply causes the curve to shift to the right or to the left, and sketch the new demand or supply curve on the diagram. In other words, does the event increase or decrease the amount consumers want to buy or the amount producers want to sell? Step 4. Identify the new equilibrium, and then compare the original equilibrium price and quantity to the new equilibrium price and quantity. Draw Graph: Change in Demand? Change in Peq: Determinant: Change in Supply? Change in Qeq: Determinant:

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter7: Demand And Supply

Section: Chapter Questions

Problem 6AA

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E-cigarettes. Multiple credible reports are published detailing the adverse health effects of e- cigarettes (vaping). This is new information: the e-cig industry had been basing its advertising around alleged health benefits of e-cigarettes over tobacco products. What is the effect on the price of e- cigarettes? On the quantity of e-cigarettes sold per month? (E-cigarettes are market)

Step 1. Draw demand and supply curves showing the market before the economic change took place. Using this diagram, find the initial equilibrium values for price and quantity.
Step 2. Decide whether the economic change being analyzed affects demand or supply. In other words, does the event refer to something in the list of demand shift variables or supply shift variables?

Step 3. Determine whether the effect on demand or supply causes the curve to shift to the right or to the left, and sketch the new demand or supply curve on the diagram. In other words, does the event increase or decrease the amount consumers want to buy or the amount producers want to sell?

Step 4. Identify the new equilibrium, and then compare the original equilibrium price and quantity to the new equilibrium price and quantity.

Draw Graph:

Change in Demand?

Change in Peq:

Determinant:

Change in Supply?

Change in Qeq:

Determinant:

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