You go on vacation for 14 days to an island in the middle of the ocean that is known for selling beautiful pearls. On day 1 of your vacation, you buy 10 small pearls for $10 from the 100 pearls available. The next day, there is a storm that destroys the boats in the area, including the pearl divers’ boats. The day you leave, you return to the pearl market and ask to buy 1 more pearl. 1. Estimate what the price of pearls would be on the last day of your vacation. Would the price rise, decrease, or stay the same? 2. Draw 1 diagram showing the supply and demand for pearls on the island before and after the storm. On the same diagram, show the shift of the supply or demand curve to the proper location. 3. Use your diagram and principles of supply and demand to explain your estimated price for pearls on the last day of your vacation.
You go on vacation for 14 days to an island in the middle of the ocean that is known for selling beautiful pearls.
On day 1 of your vacation, you buy 10 small pearls for $10 from the 100 pearls available.
The next day, there is a storm that destroys the boats in the area, including the pearl divers’ boats.
The day you leave, you return to the pearl market and ask to buy 1 more pearl.
1. Estimate what the price of pearls would be on the last day of your vacation. Would the price rise, decrease, or stay the same?
2.
Draw 1 diagram showing the supply and demand for pearls on the island before and after the storm.
On the same diagram, show the shift of the supply or demand curve to the proper location.
3. Use your diagram and principles of supply and demand to explain your estimated price for pearls on the last day of your vacation.
Supply refers to the amount of a good or service that is available in the market, while demand refers to the amount that consumers are willing to buy at a given price. The relationship between supply and demand determines the market price of a good or service. When supply exceeds demand, prices tend to fall, while when demand exceeds supply, prices tend to increase.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
