There are answers to these questions, can that be represented/explain on a Demand and Supply graph? Suppose
Question:
There are answers to these questions, can that be represented/explain on a Demand and Supply graph?
Suppose that, due to reasons unknown, there has been a sudden increase in demand for toilet paper.
a. If the market adjusts to a new equilibrium, what will happen to the price and quantity of toilet paper?
Increase in demand will lead to an increase in quantity traded for toilet paper and an increase in price as well.
b. Now suppose that instead, the government forces firms to keep prices constant (anti-gouging laws). What will happen to the quantity of toilet paper supplied and demanded?
The quantity of toilet paper supplied will reduce since suppliers cannot charge a high price and earn higher profits. The quantity of toilet paper demanded will increases since consumers can now buy toilet paper at a low price (increase in purchasing power).
c. Do anti-gouging laws help consumers get enough toilet paper at reasonable prices? Why or why not?
Anti-gouging laws help the consumer to get toilet paper at reasonable prices, but it does not mean that every customer is able to get toilet paper. This is because there will be a shortage of toilet paper at the market price due to an excess of demand over supply.