Question

Label each of the following scenarios with the set of symbols that best indicates the price change and quantity change that occur in the scenario. In some scenarios, it may not be possible from the information given to determine the direction of a particular price change or a particular quantity change. We will symbolize those cases as, respectively, “P?” and “Q?” The four possible combinations of price and quantity changes are:. LO3.5

P Q? P? Q
P Q? P?Q
On a hot day, both the demand for lemondae and the supply of lemonade increase.
On a cold day, both the demand for ice cream and the supply of ice cream decrease.
When Hawaii’s Mt. Kilauea erupts violently, the demand on the part of tourists for sigtseeing flights increases but the supply of pilots willing to provide these dangerous flights decreases.
In a hot area of Arizona where they generate a lot of their electicity with wind turbines, the demand for the electricity falls on windy days as people switch off their air conditioners and enjoy the breeze. But at the same time, the amount of electricity supplied increases as the wind turbines spin faster.

Answer 1

Here are the following scenarios of Demand and Supply changes that affects price and quantity.

If Then
Demand Increases Price and Quantity increases
Demand Decreases Price and Quantity decreases
Supply Increases Price decreases and Quantity increases
Supply Decreases Price increases and Quantity decreases
Increase in Demand & Decrease in Supply Price increases & Quantity is undetermined
Decrease in Demand & Increase in Supply Price decreases & Quantity is undetermined
Demand & Supply Increases Price is undetermined & Quantity increases
Demand & Supply Decreases Price is undetermined & Quantity decreases

1) demand for lemonade and the supply of lemonade increase.
→ P? Q
Price is undetermined and quantity increases.

2) demand for ice cream and the supply of ice cream decrease.
→ P? Q
Price is undetermined and quantity decreases

3) demand for sightseeing flights increases but the supply of pilots willing to provide these dangerous flights decreases.
→ P Q?
Price increases and quantity is undetermined

4) demand for the electricity falls but at the same time, the amount of electricity supplied increases
→ P Q?
Price decreases and quantity is undetermined.