Use the Supply and Demand Model to Explain What Happens

question 121

Essay

Use the supply and demand model to explain what happens to the equilibrium price and the equilibrium quantity for pasta in the following cases:
(A)There is a large expansion in the number of firms producing pasta.
(B)It is widely publicized in the press that pasta isn't as healthful as previously thought.
(C)There is a sudden increase in the price of pasta flour,which is used to produce pasta.
(D)Pasta suddenly becomes popular because a movie idol promotes it in television commercials.

---

Definitions:

Journalize

The process of recording transactions in a journal or diary in accounting, which includes the date, accounts affected, and amounts, followed by a brief description of the transaction.

Temporary Investments

Investments not intended to be held for a long term, such as stocks or bonds, purchased with the intention of selling in the near future.

Accounts Receivable

Money that is owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Quick Ratio

A liquidity measure that indicates a company’s ability to pay its current liabilities without relying on the sale of inventory, calculated as (current assets - inventories) / current liabilities.