Overview of Economics Principles - Assignment

Running head: ECONOMICS PRINCIPLES
Economics Principles
Name of the Student
Name of the University
Author Note

ECONOMICS PRINCIPLES
1
Table of Contents
Answer 1a........................................................................................................................................2
Answer 1b........................................................................................................................................3
Answer 1c........................................................................................................................................4
Answer 2..........................................................................................................................................5
Answer 3..........................................................................................................................................6
Answer 4 a.......................................................................................................................................6
Answer 4b........................................................................................................................................7
Answer 5..........................................................................................................................................7
Reference list...................................................................................................................................9

S
D2
D1
Output of
apple
Price of apple
Q
1
Q2
P1
P
2
E2
E1
ECONOMICS PRINCIPLES
2
Answer 1a
Figure 1: Increase in pears price improves the demand for apple
Source: (as created by the author)
As per the statement, price of pears, a substitute of apples, increases. This intensifies the
market demand from D1 to D2, which in turn, raises the price level from P1 to P2 as supply of
apple remains constant. Henceforth, market equilibrium upgrades from E1 to E2.