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ASSIGNMENT FOR CHAPTER 3 - 2 Raw materials decrease in...

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Question: The following events occur: 1. A new technology that reduces the time it takes to manufacture a pair of jeans becomes available. 2. The price of the cloth (denim) used to make jeans falls. 3. The wage rate paid to garment workers increases. 4. The price of a denim skirt doubles. 5. People's income increase. Explain how each event changes the demand for or supply of jeans. Answers: 1. The jeans are quickly produced making the supply increase.
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Unformatted text preview: 2. Raw materials decrease in price therefore supply increases. 3. The increased wage rates will increase supply of the product itself as well as the quantity demanded. 4. Doubling prices will most likely decrease demand and cause an increased supply because people will not be able to afford the product and supplies will mount up. 5. Demand will increase because people will have more money to purchase the jeans....
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