Question

Using a change in supply and/or demand, explain the following phenomena: a. All else constant, gasoline prices are higher in summer than winter months. b. At the same time that the quality of personal computers has been increasing, the price of personal computers has been falling.

Answer 1

Answer:

Market Equilibrium is where : Market Demand = Market Supply . Any change in either of these changes the Equilibrium , Eqlbrm price & quantity.  

Since , both the above shifts are linked to 'Change in Demand' , highlightig it  undermentioned:  

Demand : Quantity buyers are able & willing to buy , is affected by Factors - Price , Other Factors [Other Goods price , Income , Taste & preferences ] , Misclaneous (eg - seasonal factors) . Price makes change within the demand curve , other factors change (shift) the demand curve

a) Gasoline used to fuel vehicle combustion engines : faces more usage & demand in summers (seasonal factors) because of  higher air conditioner use . This increase in demand (demand curve rightward shift) and excess demand creates competition among buyers & increases price .

b) Personal Computers : have been facing taste changes against them because of convenience associated with portable laptops . This leads to decrease in demand (demand curve leftward shift ) and excess supply creates competition among sellers & reduces price.