Stone and brick are substitutes in home construction. consider the market for bricks depicted below. suppose the price of stone increases due to new regulations for the stone quarrying industry. illustrate the impact this will have on the market for bricks.

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06-09-2018
Business

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Stone and brick are substitutes in home construction. consider the market for bricks depicted below. suppose the price of stone increases due to new regulations for the stone quarrying industry. illustrate the impact this will have on the market for bricks.

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pristina pristina · Answer 1 · 2018-09-18T12:51:32+02:00

Answer: Price of bricks will increase

Explanation: Since Stone and bricks are substitutes to each other, a rise in the price of stone due to the new regulation will lead to a rise in the demand for bricks. Since bricks are now relatively cheaper as compared to stones after the price rise, people will use more bricks than stones. This will shift the demand for bricks to the right driving upwards the price for bricks and also increase the quantity of bricks being sold in the market.

avantikar avantikar · Answer 2 · 2020-01-03T11:25:42+01:00

There will be a rise in the quantity demand for brick in the market due to the rise in the price of stone due to new regulations for the stone quarrying industry, and there will be less demand for the stone in the market. As stone and brick are substitute goods.

Further Explanation:

Stone and brick are substitute products. And substitute goods have a direct relation with the demand for one good, and the price of the other substitute. If the price of the stone rises, demand for brick will rise as now brick will be cheaper than the stone.

• The equilibrium price will rise slowly when the demand rises.

• The equilibrium quantity will increase for sure, due to the rise in the price of the stone, the demand or the quantity for brick will rise.

• This situation of the rise in the price of stone will lead to rising in demand for brick, and the demand curve will shift towards upward, and this will increase the quantity of bricks sold in the market due to rise in the price of the substitute good (stone) due to new regulations.

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Answer Details:

Grade: High school

Chapter: Demand and supply

Subject: Economics

Keywords: Stone and brick are substitutes in home construction. Consider the market for bricks depicted below. Suppose the price of stone increases due to new regulations for the stone quarrying industry. For the impact, this will have on the market for bricks; substitute goods have a direct relationship with the price of the one product and the demand for the substitute product.