Instructions
Review Chapter 4 in Essential Foundations of Economics.
View the media 1.5a Resource: Supply and Demandand 1.5b Resource: Changes in Supply and Demand.
Next, consider the following scenarios. Think about how each scenario would affect the price of khaki pants.
A new technology reduces the time it takes to make a pair of khaki pants.
The price of the cloth used to make khaki pants falls.
The wage rate paid to garment workers increases.
The price of jeans increases.
People's incomes increase.
For each of the scenarios listed in Step 3, draw a demand-supply graph and label the axes with the price and quantity of khaki pants. Next, for each scenario, draw the appropriate demand-supply curve. Compare the new demand curve or supply curve by drawing it on the same graph.
Use Excel or one of the Windows drawing tools or you may use (free) online graphing software to create your graphs. There will probably be instructions available on the website to learn how to create and manipulate the graph. Alternatively, you may hand-draw the graphs and scan them in to a Word document.
Use a different color for each scenario.
Save the graphs to your computer as .jpg files or Word documents.
Copy and paste the .jpg files into the assignment document that you deliver to your instructor.
Clearly identify your finished graphs.
Within the same document, address the following questions below each graph:
Does this event change demand, supply, both, or neither?
Does this event increase or decrease demand and/or supply?
How does this change in demand and/or supply affect the equilibrium prices and quantity in the market? In other words, do they increase or decrease?
Find the new equilibrium and compare it with the original one in terms of equilibrium price and quantity. Do they increase or decrease?