Question

Suppose that two things happen simultaneously in the market for fish. First, a new technology allows fishing boats to catch more fish while using the same number of crew members as before. Second, a new study shows that eating fish at least three times a week helps prevent heart attacks.
As a result, the equilibrium price for fish will (increase/decrease/ have an ambiguous change)

while the equilibrium quantity of fish will (increase/decrease/ have an ambiguous change)

.

Answer 1

Answer:

Equilibrium price = Ambiguous change

Equilibrium quantity = Increases

Explanation:

Rightward shift of supply curve:

If there is an improvement in the technology of catching fish then this will lead to increase the productivity of the fisherman. Since, there is an increase in the productivity of the fisherman which will increase the supply of fish in the fish market and shifts the supply curve rightwards.

Rightward shift of demand curve:

If people came to know that eating more fish helps in preventing heart attacks. So, this will induces people to buy and demand more fish. Hence, there is a rightward shift in the demand curve of fish in the fish market.

Therefore,

These shifts in the supply and demand curve will increase the equilibrium quantity of fish and the impact of these shifts on equilibrium price is ambiguous because that will be dependent upon the magnitude of the shifts of demand and supply curve.