Answer the following questions.
1. If the price of a good increases, Illustrate what happens to demand?
2. If the price of a good decreases, what happens to supply?
3. Does a change in price create curve shifts? Explain.
Complete the following matrix. An example is provided.
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Event
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Market affected by event
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Shift in supply, demand, or both. Explain your answer.
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Change in equilibrium
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Frozen orange crops in California
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Orange juice
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Supply (left)-Not as many available oranges to offer consumers.
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Price will increase and quantity will decrease.
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Hurricanes in the Gulf Coast
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Gulf Coast tourism
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Price of hot dogs increases
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Hamburger
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Price of sugar increases
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Candy
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New auto company opens in Detroit
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Automobile
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War in Middle East
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Gasoline
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Movie theaters increase admission prices
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Video rentals
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Very trendy designer handbag manufacturer enters the market
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Hand bags
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Cost of cotton decreases
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Textiles
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Tennis racquets decrease in price
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Tennis balls
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Technology improves efficiency in pasta manufacturing
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Pasta
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