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Assignment on Principles of Economics

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Added on  2020-05-03

Assignment on Principles of Economics

   Added on 2020-05-03

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Running head: ECONOMICS ASSIGNMENTEconomics AssignmentName of the Student:Name of the University:Author note:
Assignment on Principles of Economics_1
1ECONOMICS ASSIGNMENTDPriceQuantity demandedQ1P1P2Q2ABPart AAnswer 1Laws of demand and supply are the most important principle of economics. The law ofdemand says that, if the price of a good or service increases, the demand for the quantitydecreases and when the price of a good or service decreases the demand for that product orservice increases, other things remaining unchanged. Law of supply represents that if price of agood or service increases, its supply would increase and vice versa, other things being same(Bruneel et al., 2012).Figure 1: Law of Demand(Source: Author)
Assignment on Principles of Economics_2
2ECONOMICS ASSIGNMENTSPriceQuantity suppliedQ1P2P1Q2ABFigure 2: Law of Supply(Source: Author)In figure 1, when price declines from P1 to P2, the quantity demanded rises from Q1 toQ2. This represents law of demand. In figure 2, when price rises from P1 to P2, quantity suppliedrises from Q1 to Q2, reflecting law of supply.
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3ECONOMICS ASSIGNMENTBefore Technological AdvanceAfter Technological AdvanceE3P1P3S1S1D1D1D2S2Q3Q1Q2P2E1PricePriceOutputOutputQ1P1Answer 2Figure 3: Shift in the market demand and supply for Ipads, before and after technologicaladvancement(Source: Author)Before the technological advancement, market equilibrium existed at E1, with price P1and output Q1. Technological advancement changes the production and market supply as it is asupply side determinant. It allows the producers to produce and supply more of the i-pads at acheaper price. This results in shifting of the supply curve to the right from S1 to S2. Thus,market supply increases from Q1 to Q2. This results in fall in price to P2. If the market demandstays unchanged, shift in supply leads to excess supply and market price falls (Rios, McConnell& Brue, 2013). Thus, the improved quality products and low price raise the demand for the i-pads and there is rightward shift of the demand curve to D2. The new equilibrium is generated atpoint E3, with price P3 and output Q3.
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