Microeconomics

Running head: MICROECONOMICS
Microeconomics
Name of the Student
Name of the University
Author Note

MICROECONOMICS
Table of Contents
Answer to exercise 1:.................................................................................................................2
Answer to exercise 2:.................................................................................................................4
Requirement A)..........................................................................................................................4
Requirement B)..........................................................................................................................6
References list:...........................................................................................................................9

MICROECONOMICS
Answer to exercise 1:
The new program launched for discovering talents would help in enabling and
discovering the best talent in several fields of entertainment. Demand for such national talent
program in the entertainment field would be primarily driven by connectivity and
interactivity. The policy for discovering national talent is creating demand of developing the
talent of population of Kingdom (saudigazette.com.sa, 2019). Hence, it can be said that the
demand is generated by the General entertainment authority of Riyadh. Supply on other hand
is generated by the application from all the segments of society who is interested in taking
part in local entertainment content.
The initial situation and the equilibrium point of the entertainment sector can be
illustrated with the help of following graph.
Entertainment market:
(Source: created by author)
De
De Se
Se
EeP
Q
Dd

MICROECONOMICS
The above graph depicts the initial equilibrium point Ee of the market which is
determined by the interaction of initial demand curves DeDe and supply curve SeSe. At this
level of equilibrium, demand created stood and that of talent supplied stood at Q. The market
of entertainment sector is in equilibrium with quantity supplied equivalent to quantity
demanded (Singleton et al., 2018).
Now, it is required to determine the impact on equilibrium with the introduction of
new policy by the entertainment authority. With the introduction of new program, there is an
increase in application that has led to an increase in overall supply (Lovasi et al., 2018). This
increase in supply would create a rightward shift in the supply curve at the given level of
demand. Once the supply curve shifts, it is required to analyze the change in equilibrium
position. An increase in supply would shift the supply curve to rightward side to S1S1. This
increase in supply given the demand would create new equilibrium point at E1. This
downward shift in supply curve increase the quantity demanded to Q1 and results a fall in
price to P1. The scenario can be explained with the help of following graph: