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Dropbox 2.4 - Donna Rezsonya ECO-310-01A 2.4 Questions...

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Donna Rezsonya ECO-310-01A 2.4 Questions & Problems/Applications
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Applications-problem 3, 1 and 5 Question 3 Does a change in consumers’ tastes lead to a movement along the demand curve or a shift in the demand curve? Does a change in price lead to a movement along the demand curve or a shift in the demand curve? Explain your answers. A change in consumers tastes leads to a shift in the demand curve. A change in price also leads to a shift in the demand curve. The reason for this is people prefer to buy affects the amount of a good as well as what they are willing to pay for it. Question 1 Explain each of the following statements using sup- ply-and-demand diagrams. a. When a cold snap hits Florida, the price of orange juice rises in supermarkets throughout the country. Cold weather damages the crop of oranges. This means the supply of oranges will decrease. This can be seen in the following figure as a shift to the left in the supply curve for oranges. The new price is higher than the old price.
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b. When the weather turns warm in New England every summer, the price of hotel rooms in Caribbean resorts plummets. People travel to warmer places to escape cold weather. If it is warm will they live, chances are they won’t travel as if it were cold. The Caribbean is warm which would be a nice place to go during the winter. This causes the demand for Caribbean resorts to be high in demand. The summer months people stay home instead of travel which is why there would be a decrease in demand for Caribbean resorts during summer months. The image below shows a shift to the left in the demand curve. c. When a war breaks out in the Middle East, the price of gasoline rises and the price of a used Cadillac falls.
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