Macroeconimics Supply and Demand

In: Business and Management

Submitted By dawnmanser
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Unit 3 Assignment

Question: The small town of Middling experiences a sudden doubling of the birth rate. After 3 years, the birth rate returns to normal. Use the graphs for each question, adding any arrows or other indicators that you feel are necessary, to illustrate the effect of these events on the following.

1. What is the effect on the market for an hour of babysitting services in Middling today, during this increased birthrate? Explain the change, if any in the price of babysitting, and in both the amount of babysitting demanded and supplied, giving your reasons for these changes.

An increase in babies will shift the demand curve outward and cause an increase in both the quantity and dollar amount. This will also cause a new higher equilibrium price to occur. During this time the increase in babies will cause an increase in demand for babysitters as well as an increase in what can be made by the babysitters.

2. What is the effect on the market for an hour of babysitting services 14 years into the future, after the birth rate has returned to normal, by which time children born today, during this increased birthrate, will be old enough to work as babysitters? Explain the change, if any in the price of babysitting, and in both the amount of babysitting demanded and supplied, giving your reasons for these changes.

As the available numbers of babies who need babysitting decreases and the baby boomers become of age to babysit, there will be an increase in the amount of baby sitters looking for employment. This increase in the amount of babysitters will cause a decrease in the amount they will get paid.

3. What is the effect on the market for an hour of babysitting services 30 years into the future, when children born today, during this increased birthrate, will be adults and are likely to be having children of their…...

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