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Running head: ECONOMICS
Economics
Name of the student
Name of the university
Author note

1ECONOMICS
Table of Contents
Answer 1....................................................................................................................................2
(a)...........................................................................................................................................2
(b)...........................................................................................................................................3
(c)...........................................................................................................................................4
Answer 2....................................................................................................................................4
Answer 3....................................................................................................................................6
Answer 4....................................................................................................................................8
a).............................................................................................................................................8
b)............................................................................................................................................9
Answer 5..................................................................................................................................10
Reference list............................................................................................................................12

2ECONOMICS
Quantity of woollen jumpers
Price
Q1 Q
E
E1
DD1
S
Answer 1
(a)
Figure 1Decrease in the demand for woollen jumpers
When the price of the leather jackets decreases, which is the substitute for the woollen
jumpers, the demand for the woollen jumpers will be declining. The reason behind this is that
when the leather jackets will be cheap, people will be buying more of leather jacket than the
wollen jumpers. Initially, the equilibrium point was E where the demand and the supply of
the woollen jumpers were at the point of equilibrium. After the price of the leather jackets
had decreased, the demand curve shifts to the left from D to D1 and the new equilibrium
point also moves down to E1. The quantity of woolen jumpers demanded now falls from Q to
Q1.

3ECONOMICS
Quantity of woollen jumpers
Price
Q
E
D
S
S1
E1
Q1
(b)
Figure 2 increase in the supply of woollen jumpers
With the adoption of the new machineries which has also helped in increasing the
productivity of the knitting industry will increase the supply of woolen jumpers. As the
productivity of the knitting industry will rise, a greater number of woolen jumpers can be
produced. The initial equilibrium was at point E where the demand for jumpers were equal to
the supply. Now, with the rise in the production of the woollen jumpers the supply curve
shifts to right with increasing the quantity supplied from Q to Q1. The supply curve shifts to
right from S to S1 with the new equilibrium point at E1.