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Principal of Microeconomics - Electricity and Solar PV Panels

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Milk is the primary raw material for the production of cream cheese. Hence, a fall in the price of milk is likely to push the supply schedule downwards as producers can produce the same quantities at lower prices. So, the equilibrium output of cream cheese will rise (from Q0 to Q1) while its price falls (from P0 to P1). Electricity and solar PV panels are substitutes of each other so that a rise in the price of the former automatically increases the demand for the latter. A shift in demand schedule for solar PV panels (from D0 to D1), leads to a rise in the point of equilibrium from E to F.

At F, both equilibrium price and quantity of solar PV panels are higher than that at E. Steel is an important raw material being used in the production of cars. A rise in the price of steel will increase the cost of production of cars leading the supply schedule to move up. With given demand schedule, D0, equilibrium point shift leftwards from E to F. At F, though quantity is much lower than that at E, the equilibrium price is found to be higher.

Demand for childminding services will rise with a rise in population owing to lower rates of child mortality. However, if a number of such organisation stays constant, there is an obvious shift in equilibrium from E to F. At F, both price and quantity are found to have increased significantly from those at E. When the cheese producer is the only seller of cheese in the market it enjoys a monopoly in the cheese market.

It faces the entire market demand since it has no other competitor. Therefore an advertisement which can stimulate people towards more cheese consumption will definitely raise the level of market demand and as a result, the demand facing the monopoly producer will also rise. Geometrically, the ceteris paribus demand curve for cheese will shift rightward as a result of this campaign. Since this producer has monopoly market power, it will take up even a very high expenditure in terms of advertisement devised for stimulating the demand for cheese.  

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