For each event, illustrate the impact on the relevant market and determine what will happen to the equilibrium price and quantity in that market.

Event
Market for:
Show which curve shifts
Equilibrium price rise or fall?
Equilibrium quantity increase or decrease?

Economic growth is expected to improve in the next two quarters.
Aluminum




Plastics production capacity has increased.
Plastics




The Japanese government has decided to subsidize its domestic automobile producers with stimulus money.
Automobiles




Manufacturers who use plastic as an input have access to cheaper plastic.
Manufactured goods that use plastic as an input

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To determine the impact on the relevant market and the changes in equilibrium price and quantity, we need to consider the principles of supply and demand.

1. Economic growth is expected to improve in the next two quarters (Aluminum):
- When economic growth is expected, it typically leads to an increase in demand for goods and services, including aluminum. This increase in demand will shift the demand curve to the right.
- As a result, the equilibrium price of aluminum will rise due to the increased demand.
- The equilibrium quantity of aluminum will also increase because of the increased demand.

2. Plastics production capacity has increased (Plastics):
- With an increase in production capacity, the supply of plastics will increase. This means the supply curve will shift to the right.
- Due to this increase in supply, the equilibrium price of plastics will fall.
- The equilibrium quantity of plastics will increase as well because of the increased supply.

3. The Japanese government has decided to subsidize its domestic automobile producers with stimulus money (Automobiles):
- With subsidies given to domestic automobile producers, their production costs decrease. This will shift the supply curve to the right.
- As a result, the equilibrium price of automobiles will fall due to the increased supply.
- The equilibrium quantity of automobiles will increase because of the lower production costs and increased supply.

4. Manufacturers who use plastic as an input have access to cheaper plastic (Manufactured goods that use plastic as an input):
- Access to cheaper plastic as an input will lower production costs for manufacturers. This decrease in costs will shift the supply curve for manufactured goods that use plastic as an input to the right.
- Consequently, the equilibrium price of these manufactured goods will fall due to the lower production costs and increased supply of plastic.
- The equilibrium quantity of these manufactured goods will increase because of the lower production costs and increased supply of plastic.

In summary:
1. Economic growth improves -> Demand for aluminum increases -> Equilibrium price and quantity of aluminum rise.
2. Plastics production capacity increases -> Supply of plastics increases -> Equilibrium price of plastics falls, while quantity increases.
3. Japanese government subsidizes domestic automobile producers -> Supply of automobiles increases -> Equilibrium price of automobiles falls, while quantity increases.
4. Manufacturers access cheaper plastic -> Supply of manufactured goods that use plastic as an input increases -> Equilibrium price of these goods falls, while quantity increases.