Suppose there is a linear downward-sloping demand curve and a linear upward-sloping supply curve for a good. The price of a substitute good increases and the price of an input to production also increases. Graph the original demand (D1) and supply (S1) curves, then dray the curves (D2 & S2) after the substitute good and input prices increase. How will the equilibrium price change after the substitute and input prices increase?
Suppose there is a linear downward-sloping demand curve and a linear upward-sloping supply curve for a good. The price of a substitute good increases and the price of an input to production also increases. Graph the original demand (D1) and supply (S1) curves, then dray the curves (D2 & S2) after the substitute good and input prices increase. How will the equilibrium price change after the substitute and input prices increase?
Chapter3: Supply And Demand: Theory
Section: Chapter Questions
Problem 8WNG
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- Suppose there is a linear downward-sloping
demand curve and a linear upward-sloping supply curve for a good. Theprice of a substitute good increases and the price of an input to production also increases. Graph the original demand (D1) and supply (S1) curves, then dray the curves (D2 & S2) after the substitute good and input prices increase. How will theequilibrium price change after the substitute and input prices increase?
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