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2 assignment Determinants of Demand & Supply (PLG1)

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Running head: DETERMINANTS OF DEMAND & SUPPLY 1
Determinants of Demand & Supply
Jean-Desire Oka
Embry-Riddle Aeronautical University

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DETERMINANTS OF DEMAND & SUPPLY
2
Joshua’s income increases, while federal taxes increase; therefore, please illustrate
by constructing a supply and demand graph, the direction in which the curves will shift
and state the new equilibrium price and quantity; for example, state whether price and
quantity increased, decreased, or are indeterminate. Please explain your rationale based on
the determinants of demand and supply.
With an increase in his income, Joshua will be able to make more purchase and therefore,
his demand curve will shift rightwards from D1 to D2. At the same time, the federal taxes rise
will result in a reduction of the cash he has on hands shifting his demand leftwards from D2 to
D3. We do not have the actual numbers so we cannot determinate whether the increase in his
income has more effects than the rise in his federal taxes and vice versa.
P1
P0
P2
Q2
Q0
Q1
S
D1
D3
Price
Quantity

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Running head: DETERMINANTS OF DEMAND & SUPPLY Determinants of Demand & Supply Jean-Desire Oka Embry-Riddle Aeronautical University 1 DETERMINANTS OF DEMAND & SUPPLY 2 Joshua’s income increases, while federal taxes increase; therefore, please illustrate by constructing a supply and demand graph, the direction in which the curves will shift and state the new equilibrium price and quantity; for example, state whether price and quantity increased, decreased, or are indeterminate. Please explain your rationale based on the determinants of demand and supply. With an increase in his income, Joshua will be able to make more purchase and therefore, his demand curve will shift rightwards from D1 to D2. At the same time, the federal taxes rise will result in a reduction of the cash he has on hands shifting his demand leftwards from D2 to D3. We do not have the actual numbers so we cannot determinate whether the increase in his income has more effects than the rise in his federal taxes and vice versa. S Price P1 P0 P2 D1 D2 D3 Q2 Q0 Quantity Q1 DETERMINANTS OF DEMAND & SUPPLY 3 Winston is disappointed in the new SUV he recently purchased. He was excited about the new technology incorporated in his SUV but they did not live up to his expectations; therefore, please illustrate by constructing a supply and demand graph, the direction in which the curves will shift and state the new equilibrium price and quantity; for example, state whether price and quantity increased, de ...
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