Supply and Demand Examples

# Supply and Demand Examples - 40 140 100 50 120 120 60 100...

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Supply and Demand examples: 1. Consider the market for minivans. For each of the events listed here, identify which of the determinants of demand or supply are affected. Draw a diagram to show the effect on the price and quantity of minivans. a. People decide to have more children. b. A strike by steelworkers raises steel prices. c. Engineers develop new automated machinery for the production of minivans. d. The price of sports utility vehicles rises. e. A stock-market crash lowers people’s wealth. 2. Ketchup is a complement for hot dogs. If the price of hot dogs rises, what happens to the market for ketchup? For tomatoes? For tomato juice? For oj? 3. The demand and supply schedules for gum are: Price Quantity Demanded Quantity Supplied (cents per pack) (millions of packs a week) 20 180 60 30 160 80
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Unformatted text preview: 40 140 100 50 120 120 60 100 140 70 80 160 80 60 180 a. Draw a graph of the gum market and mark in the equilibrium price and quantity. b. Suppose that gum is 70 cents a pack. Describe the situation in the gum market and explain how the price of gum adjusts. c. Suppose that a fire destroys some gum-producing factories and the supply of gum decreases by 40 million packs a week. Has there been a shift of or a movement along the supply curve of gum? d. Has there been a shift of or a movement along the demand curve for gum? e. What are the new equilibrium price and equilibrium quantity of gum? f. Suppose an increase in the teenage population increases the demand for gum by 40 million packs per week at the same time as the fire occurs. What are the new equilibrium price and quantity of gum?...
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