PU Economics the Effect of The Damage of Cotton Crop Discussion
ANSWER
- Hurricane Damages Cotton Crop in South Carolina: A hurricane damaging the cotton crop in South Carolina would reduce the supply of cotton, a key input in sweatshirt production. As a result, the supply curve for sweatshirts would shift to the left. This would lead to a decrease in the quantity of sweatshirts supplied and could potentially result in higher production costs, which could lead to higher prices for sweatshirts.
- Price of Leather Jackets Falls: If the price of leather jackets falls, it could lead to a substitution effect. Consumers might switch from buying sweatshirts to buying cheaper leather jackets, causing the demand for sweatshirts to decrease. This would result in a leftward shift of the demand curve for sweatshirts. As a consequence, the equilibrium quantity of sweatshirts would decrease, and the equilibrium price could also decrease due to the reduced demand.
- Colleges Require Morning Exercise in Appropriate Attire: Requiring morning exercise attire at colleges could increase the demand for sweatshirts. If students are now more inclined to wear sweatshirts as part of their required exercise attire, the demand curve for sweatshirts would shift to the right. This would lead to an increase in both the equilibrium quantity and price of sweatshirts.
- New Knitting Machines are Invented: The invention of new knitting machines could lower the cost of producing sweatshirts, potentially leading to an increase in supply. With lower production costs, manufacturers could produce more sweatshirts at any given price, leading to a rightward shift of the supply curve. As a result, the equilibrium quantity of sweatshirts would increase, and the equilibrium price could decrease due to the increased supply.
Remember that the actual magnitude of these shifts in the supply and demand curves would depend on various factors including the elasticity of supply and demand, the availability of substitutes, and the preferences of consumers.
QUESTION
Description
Using supply and demand diagrams, show the effect of the following events on the market for sweatshirts.
- A hurricane in South Carolina damages the cotton crop.
- The price of leather jackets falls.
- All colleges require morning exercise in appropriate attire.
- New knitting machines are invented.
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