Reference no: EM132231773

Question: In each of the following scenarios, begin with an initial equilibrium. Then, sketch what is happening in the market, and determine the directions of change for the equilibrium price and equilibrium quantity.

1. The Market for Generic Drugs.

Consumer incomes have increased as a result of sustained economic growth in the economy. Meanwhile, producers have gloomy profitability expectations.

2. Market for Airline Tickets

Persistent government shutdowns have led to desertions form post of air traffic controls agents, causing many airlines to cancel many flights. Flight cancelations have reduced flights by 15%. Meanwhile, the shutdown have decreased consumer incomes causing demand for air flights to decline by 18%.

3. Market for Education

Educational institutions are experiencing increased costs in producing a changing structure of demand for education. Concurrently, while employers demand different structure and intensity of education, increasing tuition and other costs, which collectively constitute the "price" of education are putting some brakes on demand for education.

4. Market for Prescription drugs

Prescription drugs prices are on an upward trend, apparently due to some changes in non-price determinants of supply. However, because prescription drugs are a necessity, demand is driven (Not by price), but by a people's state of health. Assume that people's state of health is collectively causing steady increases in demand for prescription drugs.

5. Market for Automobile Insurance

Auto insurers are confronted by competition among insurers, driving supply to increase by 24%. Mandatory requirements by law as driven demand for auto insurance to 40% this year.