The information below represents the expected demand and the planned supply schedule for umbrellas at the Oxegen Music Festival in 2011 - Leaving Cert Economics - Question 2 - 2011
Question 2
The information below represents the expected demand and the planned supply schedule for umbrellas at the Oxegen Music Festival in 2011.
| Price € | Quantity Demand... show full transcript
Worked Solution & Example Answer:The information below represents the expected demand and the planned supply schedule for umbrellas at the Oxegen Music Festival in 2011 - Leaving Cert Economics - Question 2 - 2011
Step 1
Draw and label the market demand curve for umbrellas;
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Answer
To draw the market demand curve, plot the price of umbrellas on the vertical axis (
€) and the quantity demanded on the horizontal axis (units). Connect the points from the table to form a downward-sloping demand curve (D) showing the inverse relationship between price and quantity demanded.
Step 2
Draw and label the market supply curve for umbrellas;
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For the market supply curve, use the same axes. Plot the price on the vertical axis and the quantity supplied on the horizontal axis. Connect the supply data points to create an upward-sloping supply curve (S) indicating that as price increases, the quantity supplied also increases.
Step 3
Show on your diagram: the market equilibrium price for umbrellas.
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Identify the intersection point of the demand curve (D) and the supply curve (S) on the diagram. This point indicates the market equilibrium price, which corresponds to €3.00. This is where quantity demanded equals quantity supplied.
Step 4
Show on your diagram: the market equilibrium quantity for umbrellas.
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At the equilibrium price of €3.00, refer to the corresponding quantity on the axes. The market equilibrium quantity is 400 units, where both curves intersect.
Step 5
state whether the demand curve or supply curve will shift;
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Answer
In the case of unexpected heavy rainfall during the festival, the demand curve for umbrellas will shift.
Step 6
state whether the curve you mention will shift to the right or the left;
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Answer
This demand curve (D) will shift to the right due to the increased necessity for umbrellas during the heavy rain.
Step 7
explain why the curve has shifted in the direction you have stated.
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Answer
The demand for umbrellas increases because more people will need them when rain is forecasted. This heightened demand is represented as a rightward shift of the demand curve.
Step 8
state whether the demand curve or supply curve will shift;
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If there is a breakdown of the main supply truck, the supply curve for umbrellas will shift.
Step 9
state whether the curve you mention will shift to the right or the left;
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This supply curve (S) will shift to the left due to the decrease in the number of umbrellas available at the festival.
Step 10
explain why the curve has shifted in the direction you have stated.
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Answer
The breakdown indicates that fewer umbrellas can be supplied, which leads to a leftward shift of the supply curve as the overall availability decreases.
Step 11
Outline one possible economic advantage OR one possible economic disadvantage of these new motorways for the public.
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One possible economic advantage of the new motorways is safer transport, as improved road conditions reduce the risk of accidents, leading to greater public safety.
Step 12
State and explain two actions Iarnród Éireann (Irish Rail) could take to increase demand for its services.
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Improve service frequency: By increasing the number of trains during peak hours, Iarnród Éireann can make rail options more attractive to commuters.
Reduce ticket prices: By cutting fares, more people may opt for train travel, aiding in increasing demand.
Step 13
Explain two advantages for the Irish economy of increased use of public transport such as Iarnród Éireann (Irish Rail), instead of private transport.
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Reduced environmental impact: Public transport typically results in lower greenhouse gas emissions compared to many private vehicles, contributing to a healthier environment.
Increased efficiency: A shift to public transport can alleviate traffic congestion, making travel times shorter for everyone, thereby enhancing economic productivity.
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