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BEO1105 Economic Principles | Victoria University | Melbourne Australia

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Victoria University | Melbourne Australia

   

Economic Principles (BEO1105 Economic Principles)

   

Added on  2020-02-19

BEO1105 Economic Principles | Victoria University | Melbourne Australia

   

Victoria University | Melbourne Australia

   

Economic Principles (BEO1105 Economic Principles)

   Added on 2020-02-19

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ECONOMICS PRINCIPLES 1
BEO1105 Economics Principles
Student’s Name
Course ID
University
Date
BEO1105 Economic Principles | Victoria University | Melbourne Australia_1
ECONOMICS PRINCIPLES 2
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
BEO1105 Economic Principles | Victoria University | Melbourne Australia_2
ECONOMICS PRINCIPLES 3
(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.
BEO1105 Economic Principles | Victoria University | Melbourne Australia_3
ECONOMICS PRINCIPLES 4
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.
BEO1105 Economic Principles | Victoria University | Melbourne Australia_4

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