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QUESTION:
The following graph presents the market for bikes in 2016. Between 2016 and 2017, the equilibrium quantity of bikes remained constant, but the equilibrium price of bikes decreased. Given this information, you can conclude that between 2016 and 2017, the supply of bikes    and the demand for bikes    .
Make changes to the graph to illustrate your answer by showing the positions of the supply and demand curves in 2017.
Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther.`


ANSWER:

The following graph presents the market for bikes in 2016. Between 2016 and 2017, the equilibrium quantity of bikes remained constant, but the equilibrium price of bikes decreased. Given this information, you can conclude that between 2016 and 2017, the supply of bikesincreased  Correct and the demand for bikesdecreased  Correct .
Points:
0.5 / 1
Make changes to the graph to illustrate your answer by showing the positions of the supply and demand curves in 2017.
Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther.`
Points:
1 / 1
Close Explanation
Explanation:
To solve this puzzle, start by thinking about the individual effects of shifts in supply and demand on the equilibrium price and quantity of bikes.
If the demand for bikes remains constant, a shift in the supply curve would result in a movement along the demand curve. If the supply of bikes remains constant, a shift in the demand curve would result in a movement along the supply curve. Either way, this causes a change in both the equilibrium price and the equilibrium quantity.
However, because the quantity of bikes remained constant in this case, both the supply curve and the demand curve must have shifted, and the effects of those shifts on the equilibrium quantity offset each other. Therefore, the curves shifted in opposite directions. Because the price of bikes decreased, the supply of bikes increased and the demand for bikes decreased.
Effects of Shifts in Demand or Supply on Equilibrium
No Change in SupplyIncrease in SupplyDecrease in Supply
No Change in DemandP and Q unchangedP ↓, Q ↑P ↑, Q ↓
Increase in DemandP ↑, Q ↑P ?, Q ↑P ↑, Q ?
Decrease in DemandP ↓, Q ↓P ↓, Q ?P ?, Q ↓
(Note: The ↑ (up arrow) indicates that the equilibrium object increases; the ↓ (down arrow) indicates that it decreases; and the ? (question mark) indicates that the direction of the change is unknown.)

Posted by Cleveland on August 30, 2024
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