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Using diagrams, the likely effect on the market for traditional butcher services, ,Draw a diagram that shows the main macroeconomic flows in the economy. Identify all components of the diagram. ,The weekly demand and supply schedules for t-shirts (in millions) in a free market are as follows:
Price (£)
8
7
6
5
4
3
2
1
Quantity demanded
10
12
14
16
18
20
Quantity supplied
What is the equilibrium price and quantity?
Assume that changes in fashion cause the demand for tshirts to rise by 4 million at each price. What will be the new equilibrium price and quantity?
Why does the equilibrium quantity increase differ from the increase in demand?
Now plot the data in the table on a graph and show the equilibrium. Also plot the new data corresponding to your answer in part (b).
Referring to the original data, what is the price elasticity of demand between a price of £7 and a price of£5? Is it elastic or inelastic?
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