# Supply rises and demand is constant equilibrium price

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supply rises and demand is constant – equilibrium price falls and quantity rises iv. supply falls and demand is constant – equilibrium price rises and quantity falls v. demand rises by the same amount that supply falls – equilibrium price rises and quantity is unchanged vi. demand falls by the same amount that supply rises – equilibrium price falls and quantity is unchanged vii. demand falls by less than supply rises – equilibrium price falls and quantity falls viii. demand rises by more than supply rises – equilibrium price rises and quantity rises ix. demand rises by less than supply rises – equilibrium price falls and quantity rises x. demand falls by more than supply falls – equilibrium price falls and quantity falls xi. demand falls by less than supply falls – equilibrium price rises and quantity falls 22. When speeding tickets were \$100, there were usually 215 speeders on the roads each month in a given city; when ticket prices were raised to \$250, there were usually 500 speeders on the roads in the city each month. Can you find any economics in this observation? Sort of, but incorrectly. The law of demand is violated. As the price of speeding tickets rises, the quantity demanded of them declines, not rises. The opposite would also be true. If the city were to lower the risk associated with speeding, drivers would increase their quantity demanded for speeding tickets. 23. Draw a diagram that shows a larger increase in demand than the decrease in supply. S 1 D 1 S 2 D 2 Q P
10 24. Draw a diagram that shows a smaller increase in supply than the increase in demand. 25. Directions: For each question, draw a market in equilibrium, labeling the initial equilibrium price and equilibrium quantity. Then shift the appropriate curve and label the new equilibrium price and equilibrium quantity. Next, fill in the blanks to describe what happened. a. Subsidies to producers of this good increase: The equilibrium price will fall and the equilibrium quantity will rise . b. There is a decrease in government restrictions for producers of this good: The equilibrium price will fall and the equilibrium quantity will rise .
11 c. There is an increase in taxes on the production of this good: The equilibrium price will rise and the equilibrium quantity will fall . d. There is an increase in preferences for this good: The equilibrium price will rise and the equilibrium quantity will rise . e. There is an increase in income and this is an inferior good: The equilibrium price will fall and the equilibrium quantity will fall .
12 f. Buyers expect the price of this good to fall in the future: The equilibrium price will fall and the equilibrium quantity will fall . g. There is an increase in the price of a relevant resource used to produce this good: The equilibrium price will rise and the equilibrium quantity will fall .
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