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# Problem Set: Scarcity, Choice and Economic systems - Coursework Example

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Since all the resources are assumed to be limited, so that if all the resources are devoted in the production of the technology that will save life…

## Extract of sample "Problem Set: Scarcity, Choice and Economic systems"

Download file to see previous pages A decrease in the in the supply of coffee is represented by the leftward shift of the original supply curve from S0S0 to S1S1 (Stilwell, Frank, and Mike Beggs 148). The immediate effect of the decrease in the supply of coffee in the global market is a shortage in the ruling price P e. this shortage will force the price upwards resulting to a fall in the quantity demanded and eventually a new equilibrium price will be established at P3.on the other hand when the price increases as a result of the fall in the quantity supplied, the quantity of the coffee that will be demanded will also fall shifting the equilibrium quantity from Q e to Q 3.
b) Equilibrium is a situation when the quantity of the commodity that is demanded in the market at a particular period of time is the same as the quantity that is supplied at the same period of time (Buechner 18). The quantity that is supplied at \$1000 is far much less than the quantity that is demanded at the same price and therefore equilibrium cannot be at the price of \$1000 since the quantity that is demanded is not equal to the quantity that is supplied at this price.
c) Destruction of the significant number of apartment will cause a fall in the quantity that is supplied and as a result the price of the rooms will increase forcing the demand to fall. A decrease in the quantity supplied is represented by a shift in the supply curve from S0 to S1. Increase in the price as a result of the fall in the supply is represented by a shift from P0 to P1 and as a result the equilibrium quantity will shift from Q0 to Q1.
When the price increases from P 1 to P 2 there will be an increase in the quantity of the denim jeans that is supplied from Q 1 to Q 2 and thus this situation is known as a movement along the supply curve.
When the income of the household decreases, there will be a fall ...Download file to see next pagesRead More
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