Oil is a main component in the manufacture of plastic bags If the price of oil

# Oil is a main component in the manufacture of plastic

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Oil is a main component in the manufacture of plastic bags. If the price of oil were to increase, the price of plastics bags would increase and the quantity would decrease. The government recently imposed a number of regulations on companies that will make it more expensive for companies to hire workers. What consequence will this have on market? These regulations raise the cost of labor and shift supply to the left. What would we expect to happen to the price and quantity of Pepsi if the price of Coke increases and Pepsi develops a new technology that makes its production process more efficient? The equilibrium price will be indeterminate and the equilibrium quantity will go up. The equilibrium price of teddy bears is \$5. A study comes out that says owning a teddy bear causes you to earn a lower salary. If all other factors are held constant, which of the following scenarios could happen? The price of teddy bears decreases to \$4 because of a demand shift. When the price for computers is expected to fall in the future, what happens? The demand for computers decreases. Katarina drives past the same gas station every day. She realizes that the gas station always changes its prices on Tuesdays but keeps the price steady the rest of the week. On Saturday, Katarina turns on the news and hears a report projecting that the price of gasoline is going to increase. Holding all else constant, what do you think would happen to Katarina’s demand for gasoline on Monday? Her demand would shift to the right. In a small city, it is not unusual that a single place exists to buy or sell a car. How would we expect the owner of this car dealership to behave? The owner would raise prices on cars because the dealership has market power. How does the market demand reflect the law of demand? As the price decreases, each and every buyer purchases a larger quantity of the product. Which of the following could cause the supply curve for the market for oranges to shift to the left? a severe hurricane in Florida If the cost of flour increases from \$3 to \$5 a bag, we could predict the supply curve for bagels to shift to the left. Sabrina decided to start selling lemonade on her street. The other kids in the neighborhood noticed that Sabrina was making a lot of money selling lemonade. These kids decided to open their own lemonade stand. When they opened their own lemonade stand, the equilibrium price decreased and the equilibrium quantity increased.
Leading economic indicators suggest that incomes will be going up next year. In response to these reports, companies are forecasting increased prices for future sales of their goods. As a result of these increases, the supply curve will shift to the left, causing the equilibrium price to increase.

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• Fall '16
• Robi Ragan
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