Supply and Deman

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Submitted By dlpettitt
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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.

The effect on the market is an increase in babies, resulting in an increased need for babysitters. Looking at D1 on the graph, we notice the baby population was lower and babysitters were cheaper. Looking at D2 on the graph, we notice the baby population increases, causing the price increase due to the scarcity of resources, the babysitters. The point of equilibrium moves up and to the right where D2 intersects S1.

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.

We now have the opposite happening. The baby population is back to normal but there is a surplus of potential babysitters creating competitive prices as there are more teenagers trying to get babysitting jobs. Looking at the graph, D1 reflects the babies that need babysitters; S1 was the original number of potential babysitters but has now moved to S2, which is significantly increased. Due to this, the price of a babysitter should go down. The point of equilibrium moves down and to the right where D1 intersects S2.

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 own? Explain the change, if any…...

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