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ECONOMICS PRINCIPLES1 BEO1105 Economics Principles Student’s Name Course ID University Date
ECONOMICS PRINCIPLES2 Question 1 The study identifies the fundamental difference between two terms i.e. change in demand and change in quantity demanded. Although both the terms look same, the meaning of the terms is somewhat different. First of all, the idea of demand and quantity demanded should be clarified. The economic term, demand signifies the willingness and capability to buy by the purchasers whereas quantity demanded denotes the amount of a product or service required by the potential consumers at a given fixed rate (Albrecht, 2016). In the underlying section, two figures have been demonstrated to explain the difference between change in demand and change in quantity demanded for hats. Figure: Change in Demand Source:(Albrecht, 2016) Precisely, influenced by the factors such as income of the buyers, preferences, and price of substitute products/services, a change in demand can be observed as shown in the above figure
ECONOMICS PRINCIPLES3 (Albrecht, 2016). In case of change in demand, the demand curve will be shift either to the left or to the right showing the decrease or increase in demand. For example, due to preferences of buyers, demand for hats can be increased shifting the demand curve towards right side from D to D1. Figure: Change in quantity demanded Source:(Albrecht, 2016) On the other hand, change in quantity demanded represents along the demand curve considering the change in price of hats. For instance, if the price of hats will be increased from P to P1, the quantity demanded will be reduced from Q to Q1 (Albrecht, 2016). On the other hand, a decrease in price of hats from P to P2 can increase the quantity demanded from Q to Q2.
ECONOMICS PRINCIPLES4 Question 2 a) In the first event, the price of solar panel is found to be more than the market equilibrium price. A rise in the price leads to increase in the quantity supplied and fall in the quantity demanded (Taylor, Stonebarger and Leven, 2015). Hence, a fall in the quantity demanded leads to oversupply of products in the market. A diagram has been presented herein below for further understanding: Figure: Price above equilibrium level Source: (Albrecht, 2016) On the basis of the above diagram, it can be seen that the quantity demanded shifts from QE to QD and quantity supplied from QE to QS (Albrecht, 2016). Hence, a oversupply can be evident in the market that can be solved by either reducing the price or by reducing the supply of solar panels in the market.
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