Peay BUSN 5620 Week 3 Personal Assignment

Peay BUSN 5620 Week 3 Personal Assignment - Joi Peay BUSN...

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Joi Peay BUSN 5260 Current Economic Analysis Week 3: Personal Assignment Problems Problem 1 For each of the following draw a separate diagram to demonstrate the answer. (Hint: Remember the difference in a change in demand [supply] and a change in quantity demanded [supplied]. Don't shift both curves unless appropriate). Describe what happens to equilibrium price and sales. Explain why or why not this makes sense in the real world. -A- Show the effect on the U.S. new construction residential housing market in the event of a severe economic recession such as the country recently experienced. In this instance, construction will decline, which is represented by the new demand line. The supply will remain constant while the equilibrium price and sales will decrease. This makes sense in the real world because during a recession, spending is a lot less as resources are scarcer and consumers aren’t going to be building new homes because the market values will typically be lower and unpredictable. It may not be smart as the potential to lose more money is higher. 1
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Joi Peay -B- Show the effect on the U.S. air travel market if American Airlines unexpectedly folds (ceases operations) overnight.
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