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In an analysis of the market for paint, an economist discovers the facts listed below. State whether each of these changes will affect supply or demand, and in what direction.

a. There have recently been some important cost-saving inventions in the technology for making paint.

b. Paint is lasting longer, so that property owners need not repaint as often.

c. Because of severe hailstorms, many people need to repaint now.

d. The hailstorms damaged several factories that make paint, forcing them to close down for several months.

Short Answer

Expert verified

a. Supply

b. Demand

c. Demand

d. Supply

Step by step solution

01

Step 1. Introduction Part a.

The supply of a product is affected by several factors such as technology, government regulation, cost of production, etc. Change in these factors would cause the supply curve to shift. Similarly, demand for a product is also affected by several factors such as the price of related goods, income level, population, etc.

02

Step 2. ExplanationPart a. 

Improvement in technology would cause the cost of producing paint to decline. This means that by incurring the same cost level, suppliers can produce more quantity of paint. So, the supply of paint would increase. This would cause the supply curve to move to the right.

03

Step 1. IntroductionPart b. 

The durability of a product is one of the factors that can affect the demand for a good or service.

04

Step 2. ExplanationPart b.

As the paint is durable,the consumer does not need to paint that often, This means they would not need paint as much, thus reducing the demand for paint. This would further contribute to a leftward shift in the demand curve.

05

Step 1. IntroductionPart c. 

Weather and climate can also affect the demand and supply of goods and services. Changes in weather conditions can influence both demand and supply.

06

Step 2. ExplanationPart c. 

Severe hailstorms would destroy paints on houses. People would need to repaint their houses, for this they would need more paints. So, the demand for paints would increase causing the demand curve to move to the right.

07

Step 1. IntroductionPart d.

As discussed earlier, changes in weather conditions can affect both demand and supply. Unfavorable changes in weather can hamper the supply of a product by limiting access to raw materials and other inputs.

08

Step 2. ExplanationPart d.

In this case, as the factories producing paint get destroyed in hailstorms they would have to shut down operations for months. Lower production or no production would mean that supply would be reduced causing the supply curve to move to the left.

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