Economics Assignment - Microeconomics Demand and Protectionist Policy

Running head: ECONOMICS ASSIGNMENT
Economics Assignment
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1ECONOMICS ASSIGNMENT
Table of Contents
Question 1........................................................................................................................................2
Change in quantity demanded.....................................................................................................2
Change in demand.......................................................................................................................3
Question 2........................................................................................................................................5
Absolute and comparative advantage..........................................................................................5
Trump’s protectionist policy and likely consequences................................................................6
References list..................................................................................................................................8

2ECONOMICS ASSIGNMENT
Question 1
In the theory of microeconomics demand constituted by consumers has a critical role to
play. Economically, demand of a good describes buyers’ desirability and ability to purchase a
good at the fixed market price (Phlips, 2014). Change in the demanded quantity differs
completely from that of a change in entire demand.
Change in quantity demanded
The concept of change in demand corresponds to the amount of demand change for a
commodity. It is own price of the good that causes quantity demanded to change. Change in
quantity demanded captures only impact of own price change on demand keeping other factors
constant. The direction of change in the quantity follows the principle of law of demand. The
stated law proposes that price and demand move in opposite direction. That is demand increase
when there is an increase in price and decreases with an escalation in price (Stiglitz &
Rosengard, 2015). The former is called demand expansion while the latter is known as demand
contraction. The change in quantity demanded is captured by movement on the demand curve
from one point to another. During demand expansion, it moves from right to left while during
contraction is shown by the movement from right to leftward direction on the demand curve. The
impact on market following a change in quantity demanded is explained in figure 1 with the aid
of following figure using both demand and supply curve.