Question

The following table shows the aggregate supply and demand data for a country. If input prices decrease and AS shifts to the right by 3,000 units at each price level. What will the new price equal?

Answer 1

With a rightward shift of 3,000 units in aggregate supply, the new equilibrium price is $600, where aggregate demand intersects the shifted aggregate supply curve in the country's economy.

To find the new equilibrium price after the aggregate supply (AS) shifts to the right by 3,000 units at each price level, we need to identify the intersection point of the new AS curve and the original Aggregate Demand (AD) curve.

Let's find the original equilibrium:

Original Equilibrium:

- At a price level of 500, AD = AS (7,000 units).

- Therefore, the original equilibrium price is $500.

Now, with the AS shift to the right by 3,000 units:

- The new equilibrium occurs where the AD intersects the shifted AS curve.

- This occurs at a price level of 600, where AD = AS (9,000 units).

Therefore, the new equilibrium price is $600.

Answer 2

the new price is 100.

Step-by-step explanation:

The table shows that increase in aggregate supply decreases the aggregate demand and increases the prices of the product while if decrease occurs in aggregate supply, it increases the aggregate demand and decreases the prices of the substance. So if the aggregate supply decreases from 4000 to 3000 so the new price of the product also decreases from 200 to 100 because there is a direct relationship between price and aggregate supply. If one decreases the other automatically decreases and vice versa.