Answer to Question #74685 in Economics for Khulekani Magwaza

Question

Using well labelled diagrams, explain how the equilibrium price and equilibrium quantity of apples will change as a result of the following; 2.2.1 A change in the wages of farm workers from R150 per day to R200 per day. (10) 2.2.2 A decrease in the price of fertilizers and a concurrent increase in the demand for apple juice.

Answer 1

2.2.1 Growth of wages of farm workers will rise both equilibrium price and quantity of apples.
2.2.2 A decrease in price of fertilizers will result in rising equilibrium quantity of apples, but will decrease their equilibrium price. If this price decrease will be significant, potentially this will decrease the demand of apple juice.