markets3a - 1 Additional Problem 3 Answers : Market...

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1 Additional Problem 3 Answers : Market Analysis Consider the market for bus service. First draw a graph depicting market equilibrium for bus service. Then, for each of the events given below, analyze what effects each event will have on the market equilibrium for bus service, i.e. effect on equilibrium price, equilibrium quantity, demand or quantity demanded, supply or quantity supplied. You must draw separate graphs for each of the following events. Remember to label all axes, functions, and equilibrium points in your graphs precisely. a) Bus drivers go on strike in order to pressure their employers for wage increases. Bus Service P S S Í P E C S decreases Î Temporary shortage ( AB ) P E A B Increase P E Í Decrease Q E D Decrease in Q D from B to C 0 Q E Q E Q Decrease in “Supply” from S to S Decrease in “Quantity Demanded” from B to C Bus drivers go on strike: Supply decreases to S’ : Fewer drivers, fewer buses. b)
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This note was uploaded on 10/26/2009 for the course ECON 180-004-20 taught by Professor Bresnock during the Fall '09 term at UCLA.

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markets3a - 1 Additional Problem 3 Answers : Market...

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