Table of contents

1. Introduction to Macroeconomics1h 57m
2. Introductory Economic Models59m
3. Supply and Demand3h 43m
4. Elasticity2h 26m
5. Consumer and Producer Surplus; Price Ceilings and Price Floors3h 40m
6. Introduction to Taxes1h 25m
7. Externalities1h 3m
8. The Types of Goods1h 13m
9. International Trade1h 16m
10. Introducing Economic Concepts49m
11. Gross Domestic Product (GDP) and Consumer Price Index (CPI)1h 37m
12. Unemployment and Inflation1h 15m
13. Productivity and Economic Growth1h 17m
14. The Financial System1h 37m
15. Income and Consumption52m
16. Deriving the Aggregate Expenditures Model1h 22m
17. Aggregate Demand and Aggregate Supply Analysis1h 18m
18. The Monetary System1h 1m
19. Monetary Policy1h 32m
20. Fiscal Policy1h 0m
21. Revisiting Inflation, Unemployment, and Policy46m
22. Balance of Payments30m
23. Exchange Rates1h 16m
24. Macroeconomic Schools of Thought40m
25. Dynamic AD/AS Model35m
26. Special Topics11m

3. Supply and Demand

Supply and Demand Together: One-sided Shifts

Macroeconomics

3. Supply and Demand

Supply and Demand Together: One-sided Shifts

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Multiple Choice

Which of the following situations would lead to an increase in the equilibrium price of carrots and a decrease in the equilibrium quantity of carrots sold?

An increase in the price of hummus, a complement to carrots

An increase in the price of celery, a substitute for carrots

An increase in the price of fertilizer, an input for carrots

An increase in consumers' incomes, assuming carrots are a normal good

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Verified step by step guidance

Identify the factors affecting the supply and demand of carrots. In this problem, we are considering the price of hummus, celery, fertilizer, and consumer incomes.

Understand the relationship between carrots and the other goods mentioned: hummus is a complement, celery is a substitute, and fertilizer is an input.

Analyze how each situation affects the supply and demand curves: An increase in the price of hummus (a complement) would decrease demand for carrots, shifting the demand curve left. An increase in the price of celery (a substitute) would increase demand for carrots, shifting the demand curve right. An increase in the price of fertilizer (an input) would decrease the supply of carrots, shifting the supply curve left. An increase in consumer incomes would increase demand for carrots if they are a normal good, shifting the demand curve right.

Determine the effect on equilibrium price and quantity: A leftward shift in the supply curve (due to increased fertilizer prices) would lead to a higher equilibrium price and a lower equilibrium quantity of carrots.

Conclude that the situation leading to an increase in the equilibrium price and a decrease in the equilibrium quantity of carrots is the increase in the price of fertilizer, as it directly affects the supply side by increasing production costs and reducing supply.