Q Answer all the questions in terms of shifts in or movements along the demand and supply curves - Economics - Theory of Consumer Behaviour

Question

Q Answer all the questions in terms of shifts in or movements along
the demand and supply curves

a) In 2001, the Supreme Court of India banned smoking in public
places How will this affect the equilibrium price and quantity of
cigarettes ?
b) New discoveries of oil reduce the price of petrol & diesel
How will this affect the equilibrium price and quantity of new
cars?
c) New environment regulations require the during industry to use a
more environment friendly technology whose running cost are higher
How will this affect the equilibrium price of drug?

Lavanya Mazmudar · Accepted Answer

Answer 16:
(A) A ban on cigarette smoking in public places should cause a
backward shift in demand curve Consequently average price of
cigarettes should fall Fall in average price of cigarette should
cause a fall in quantity sold (B) New discoveries of oil reducing
the price of petrol/diesel should imply increase in demand for cars
(in terms of shift in demand curve to the right), as cars and
petrol/diesel are complementary goods (C) Due to the use of
costlier (environment friendly) technology, supply curve of drug
will shift to the left, causing a rise in the price of drug