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10 Cards in this Set
- Front
- Back
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RE: Pizza, Give an example of something that would shift this supply curve.
Would a change in the price of pizza shift this supply curve? |
Shift the supply curve include changes in prices of inputs like tomato sauce and cheese, changes in technology like more efficient pizza ovens or automatic dough makers, changes in expectations about the future price of pizza, or a change in the number of sellers.
A change in the price of pizza would not shift this supply curve; it would only move from one point to another along the same supply curve. |
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RE: Pizza, Give an example of something that would shift this demand curve.
Would a change in the price of pizza shift this demand curve? |
things that would shift the demand curve include changes in income, prices of related goods like soda or hot dogs, tastes, expectations about future income or prices, and the number of buyers.
A change in the price of pizza would not shift this demand curve; it would only lead us to move from one point to another along the same demand curve. |
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Explain each of the following statements using supply-demand diagrams
a)When a cold snap hits Florida, the price of orange juice rises in supermarkets throughout Canada. |
-Cold weather damages the orange crop reducing the supply of oranges.
-the supply curve for oranges shifts to the left of -The new equilibrium price is higher than the old equilibrium price. |
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Explain each of the following statements using supply-demand diagrams
b) When the weather turns warm in Quebec every summer, the prices of hotel rooms in Caribbean resorts plummet |
-People often travel to the Caribbean from Quebec to escape cold weather, so demand for Caribbean hotel rooms is high in the winter. In the summer, fewer people travel to the Caribbean, since northern climates are more pleasant.
-a shift to the left in the demand curve -The equilibrium price of Caribbean hotel rooms is thus lower in the summer than in the winter |
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Explain each of the following statements using supply-demand diagrams
c)When a war breaks out in the middle east, the price of gasoline rises, while the price of a used SUV falls |
-2 graphs, one for gas and one for SUV
GAS -When a war breaks out in the Middle East, many markets are affected. Since much oil production takes place there, the war disrupts oil supplies -shifting the supply curve for gasoline to the left -a rise in the equilibrium price of gasoline SUV -With a higher price for gasoline, the cost of operating a gas-guzzling automobile, like a SUV, will increase. -the demand for used SUVs will decline, as people in the market for cars will not find SUVs as attractive. In addition, some people who already own SUVs will try to sell them. -that the demand curve for used SUVs shifts to the left, while the supply curve shifts to the right -a decline in the equilibrium price of used SUVs. |
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Consider the market for mini vans. For each of the events listed here
1.identify which of the determinants of demand or supply are affected 2.indicate whether demand or supply is increased or decreased 3. Show the effect on the price and quantity of minivans a)people decide to have more chilren |
-Change in Taste
-demand for minivans will increase. Supply won't be affected. -rise in both price and quantity |
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Consider the market for mini vans. For each of the events listed here
1.identify which of the determinants of demand or supply are affected 2.indicate whether demand or supply is increased or decreased 3. Show the effect on the price and quantity of minivans b)A strike by steelworkers raises steel prices. |
-a rise in input prices
-the supply of minivans decreases. Demand won't be affected. -a rise in the price of minivans and a decline in the quantity |
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Consider the market for mini vans. For each of the events listed here
1.identify which of the determinants of demand or supply are affected 2.indicate whether demand or supply is increased or decreased 3. Show the effect on the price and quantity of minivans c) Engineers develop new automated machinery for the production of minivans |
-technology
-an increase in supply. Demand isn’t affected. -a decline in the price of minivans and an increase in the quantity |
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Consider the market for mini vans. For each of the events listed here
1.identify which of the determinants of demand or supply are affected 2.indicate whether demand or supply is increased or decreased 3. Show the effect on the price and quantity of minivans d)The price of SUV's rises |
Because sport utility vehicles are substitutes for minivans, the rise in the price of sport utility vehicles affects minivan demand (that is, there is a rise in the price of a related good).
-an increase in demand for minivans. Supply is not affected. -the price and quantity of minivans both rise |
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Consider the market for mini vans. For each of the events listed here
1.identify which of the determinants of demand or supply are affected 2.indicate whether demand or supply is increased or decreased 3. Show the effect on the price and quantity of minivans e)A stock market crash lowers people's wealth |
-income
reduction in the demand for minivans, since minivans are likely a normal good. Supply isn’t affected. -both price and quantity decline |
