supply for-students

CChangehange in in QDQD [ [inverse]inverse] oror CChangehange in in QSQS

[direct][direct]

[[caused by acaused by a ““change in pricechange in price””]]or aor a

Will We Have Will We Have

SwooshSwoosh “ “Change Change in in DD”” caused bycaused by ““TIMERTIMER””

“ “CChange in hange in SS”” caused bycaused by ““RATNESTRATNEST””

BoingsBoings

Increase in “QD”Increase in “QD”[caused by a “decrease in price”][caused by a “decrease in price”]

Decrease in “QD”Decrease in “QD”[caused by an “increase in price”][caused by an “increase in price”]

1. Price change1. Price change2. Movement2. Movement3. P3. Pointoint to to ppoinointt[“[“Snap shotSnap shot of of 1 pt1 pt in in timetime]]

Change in “D” [“TIMER”]Change in “D” [“TIMER”]1. Non-price1. Non-price2. Whole curve2. Whole curve3. Shift3. Shift[“Time passes”][“Time passes”]

What could causeWhat could cause an an “increase“increase in in DemandDemand?”?” 5. ExpectationsExpectations of a shortageshortage1. Increase in tastetaste 6. ExpectationsExpectations of a price increaseprice increase2 .Increase in incomeincome [normal goodnormal good] 7. ExpectationsExpectations of positive future incomepositive future income3. Decrease in incomeincome [inferior goodinferior good] 8. IncrIncr in price of a substitutesubstitute for product “X”

4. Increase in market sizemarket size [## of of consumersconsumers] 9. DecrDecr in price of a complementcomplement of product “X”

PP11

PP22

QDQD11

PP11

PP22

QDQD11

DD DD

DD11 DD22 DD11

DD22PP

PP

““Increase in D”Increase in D” ““Decrease in D”Decrease in D”

QDQD22 QDQD22

Decrease in “QS”Decrease in “QS”[caused by a “decrease in price”][caused by a “decrease in price”]

Increase in “QS”Increase in “QS”[caused by an “increase in price”][caused by an “increase in price”]


Change in “S” [RATNEST]Change in “S” [RATNEST]

1. Non-price1. Non-price2. Whole curve2. Whole curve3. Shift3. Shift[“Time passes”][“Time passes”]

What could cause an “increase in supply?”What could cause an “increase in supply?” 4. IncreaseIncrease in numbernumber of of producersproducers1. DecreaseDecrease in resource costresource cost [wages/raw materials] 5. IncreaseIncrease in technologytechnology2. DecreaseDecrease in the price of an alternative outputalternative output for “X”“X” 6. IncreaseIncrease in subsidiessubsidies3. Producer expectationsProducer expectations of a price decreaseprice decrease 7. DecreaseDecrease in taxestaxes

PP11

PP22

QSQS11

PP11

PP22

QSQS11

SS SS

SS11 SS22SS11SS22

PPPP

““Increase in S”Increase in S” ““Decrease in S”Decrease in S”

QSQS22QSQS22

65,00065,000 QSQS22

25,00025,000 QSQS11

SS$3$3

$2$2

Soybeans [bushels]Soybeans [bushels]

““Particular Price”Particular Price”

Firm A’s SupplyFirm A’s Supply Firm B’s SupplyFirm B’s Supply Firm C’s SupplyFirm C’s Supply

Soybeans [bushels]Soybeans [bushels] Soybeans [bushels]Soybeans [bushels] Soybeans [bushels]Soybeans [bushels]

$3$3

$2$2

$3$3

$2$2

$3$3

$2$2

10,00010,000 30,00030,000 QS1QS1 QS2QS2

5,000 5,000 10,00010,000 QS1QS1 QS2QS2

10,00010,000 25,00025,000 QS1 QS1 QS2QS2

SS SS

Direct – both variables move in same direction.

SS

Deriving Market Supply from Individual Firm Supply CurvesDeriving Market Supply from Individual Firm Supply Curves

.

QSQS22

DirectDirect

Reasons For Upsloping “S” CurveReasons For Upsloping “S” Curve1. There is increasing opportunity cost if you don’t produce.2. Current producers produce more [overtime/more shifts]3. New producers are attracted to the market.

““S”S” refers to the refers to the “whole supply curve”“whole supply curve” and refers to what and refers to what producers will supply at producers will supply at “different prices”“different prices”..““QS”QS” refers to a refers to a “point on the curve”“point on the curve” and refers to what and refers to what

producers will supply at a producers will supply at a “particular price”“particular price”..

Change in “QS”Change in “QS”1. Price change2. Movement (up/down “S” curve)

3. Point to point (along “S” curve)

SS

QSQS11

PP22

PP11

Price increasesincreases; QS increasesincreasesPrice decreasesdecreases; QS decreasesdecreases

Producers want theProducers want thehighest price possible.highest price possible.

10,00010,000 65,00065,000

$5$5

Existing Existing supplierssuppliers of of

DVD Rentals DVD Rentals are are willingwilling to to supply more supply more as theas the price price increases & others increases & others [Albertson’s] [Albertson’s] are are attracted to the attracted to the market.market.

$2$2

SSPP

$100$90$80$70$60$50$50$40$30$20$10

0

20 4040 6060 7575 100 120120 140 160160 180180 200200 220

Quantity (units of any good or service)

7070 175175

120 =120120 =120

QD=QSQD=QSEE

QDQD QSQS

QDQD QSQS

QSQS QDQD

QSQS QDQD

DD SSPrice FloorPrice FloorSurplusSurplus

Price CeilingPrice CeilingShortageShortage

DollarDollarPricePrice

If If QS>QDQS>QD; ; Price DecreasesPrice Decreases

If If QS<QDQS<QD; ; PPricerice Increases IncreasesIf If QD=QSQD=QS; ; PricePrice SStays tays SSameame

$5$5

$4$4

$3$3

$2$2

$1$1

00

ShortagesShortages & & SurplusesSurpluses

1 1 2 2 44 6 7 8 6 7 8 99 1010 1111 1212 14 14 161644

Quantity Supplied and Demanded (Thousands)

DD S

$90$90Why do the Ags have a scoreboard on the outside of the stadium?

Aggieland Football Season TicketsAggieland Football Season Tickets

The Aggies have a scoreboard outside so that the 5 ReveillesThe Aggies have a scoreboard outside so that the 5 Reveilleswho are buried outside the stadium can see the scoreboard.who are buried outside the stadium can see the scoreboard.

The 5 mascots5 mascots are ranked as5-Star generals5-Star generals and are buriedburiedfacing the scoreboardfacing the scoreboard.

The PlaquePlaque says this:“Reveille 1st, and the other Reveillesthat follow her, will always have aspecial place in an Aggie’s heart andsymbolize the undying undying spiritspirit of

Texas A&MTexas A&M.”

The Aggie War HymnThe Aggie War HymnHullabaloo, Caneck, CaneckHullabaloo, Caneck, CaneckHullabaloo, Caneck, CaneckHullabaloo, Caneck, CaneckGood bye to Good bye to texas universitytexas university

So long to the orange and the whiteSo long to the orange and the whiteGood luck to dear old Texas AggiesGood luck to dear old Texas AggiesTThey are the boys who show the real old fighthey are the boys who show the real old fight

‘‘the eyes of Texas are upon you’the eyes of Texas are upon you’That is the song they sing so wellThat is the song they sing so well

Sounds Like hellSounds Like hellSo good bye to texas universitySo good bye to texas university

We’re gonna beat you all toWe’re gonna beat you all toChigaroogaremChigaroogaremChigaroogaremChigaroogarem

Rough, Tough, Real stuff, Texas A&MRough, Tough, Real stuff, Texas A&M

““Bread & Butter”Bread & Butter” of Economics of Economics[“perfectly competitive markets”][“perfectly competitive markets”]

The Law of SupplyLaw of Supply says QSQS varies directlydirectly with priceprice.PP22

QSQS11

SS

DirectDirect – – priceprice and and QSQS movemove in the in the same directionsame direction. . (increase together or decrease together)(increase together or decrease together)

PP11

SupplySupply (& Demand)(& Demand)

The Law Of DemandLaw Of Demand says QDQD varies inverselyinversely with priceprice.

QSQS22

The law of supply and demand is learned inlearned ininfancyinfancy. . Infants demand clean diapersInfants demand clean diapers and are willing to supply peace and quiet in willing to supply peace and quiet in exchangeexchange. Mothers demand peace and quiet Mothers demand peace and quiet and are willing to supply clean diapers in and are willing to supply clean diapers in exchangeexchange. The terms of trade are arranged.““One scream equals one diaper. One scream equals one diaper. The price of one diaper is one scream.”The price of one diaper is one scream.”

SupplySupply – producers “willingness to sell.”“willingness to sell.” Or, the ““amountamount of of products offeredproducts offered at at each price duringeach price during a specific time period.”a specific time period.”

Supply Supply & & DemandDemand [[Bread & ButterBread & Butter of Econof Econ]][assuming[assuming “perfectly competitive markets” “perfectly competitive markets”]]

“I want a clean diaper.”

[[No individual can control price.No individual can control price.]]

Supply Supply (and Demand)(and Demand) “Bread & Butter”“Bread & Butter” of Economics[“perfectly competitive markets[“perfectly competitive markets”]”]

Law of SupplyLaw of Supply – QSQS varies directlydirectly with priceprice.Suppliers offer Suppliers offer moremore for sale at higher priceshigher pricesthan at lower prices. The consumersconsumers, being on the paying end, tend to buy a small amount of the product, but will buy more ifbuy more if the price is loweredprice is lowered. The suppliersupplier, on thereceiving end, considers priceprice as an as an incentiveincentiveto sell a product. The higher the price, the more incentive he has.

Bread Butter

- As price increases- As price increases

… …Q S also increasesQ S also increases

DirectDirect relationship between PP & QSQS

PP22

PP11

QSQS11

SS

PP11

PP22

SS

“Take it. We are losing money.”QS1QS1

-As priceAs price decreasesdecreases… … QS QS alsoalso decreasesdecreases

“Let’s make more.”

QSQS22

QS2QS2

4545. ElasticElastic SupplySupply – a small increase/decrease in price causes significant change in QS. Elastic supply is very responsiveto price changes.

Elastic (Flexible) SupplyElastic (Flexible) Supply Inelastic (Inflexible) SupplyInelastic (Inflexible) Supply 1. Can be made quickly 1. Cannot be made quickly2. Little expense (few 2. Great Expense (large capital capital resources required) resources required)3. (47)(47) UnskilledUnskilled workers 3. (48)(48) SkilledSkilled workers4. Long time 4. Short time5. Don’t need scarce 5. Scarcity of natural resources natural resourcesExamples: (50) (50) T-shirtsT-shirts, hats, Examples: Gold, diamonds, shot glasses, and posters and (49) (49) computerscomputers

4646. InelasticInelastic SupplySupply - regardless of price, producers are unwilling/unable to increase/decrease QS. (QS is inflexibleand unresponsive to price changes)

Elastic Elastic supplysupply is veryvery responsiveresponsive to price &

inelasticinelastic supply is unresponsiveunresponsive to price.

5151. Elastic supplyElastic supply results in a more horizontalhorizontal line & 5252. inelastic supply results in a more verticalvertical line.

0 0 1000 2000 3000 400 50001000 2000 3000 400 5000

QS1 QS2

Change in “Supply” [Curve]Change in “Supply” [Curve]1. “Non-price change” [RATNESTRATNEST]2. Whole supply curve “shifts”[There was a QS change but it was not caused by a change in price].

BroccoliBroccoli

“Suppliers produce smallesmaller/ largerlarger quantities at each price.”

““Substitutes in production”Substitutes in production”

I only I only have have 200 200

acresacres

SS11

SCornCorn SS11

PSS22 Alternative Output Price ChangeAlternative Output Price Change

[[IINNVVEERRSSEE]]

QSQS1 1

P2

P1

PSS11 SS22

[new football league- bigger “S” of games]

Don’t confuse theseDon’t confuse thesetwo with Chg in QStwo with Chg in QS..

QSQS22QSQS33

SS33 SS22

PP

““Supply Shifters” [RATNEST]Supply Shifters” [RATNEST]1. RResource Cost [wages /raw materials ] [IINNVVEERRSSEE]

2. AAlternative Output Prices [IINNVVEERRSSEE]

3. TTechnology [DIRECTDIRECT]

4. NNumber of Suppliers [DIRECTDIRECT]

5. EExpectations [about future price] [IINNVVEERRSSEE]

6. SSubsidies [DIRECTDIRECT]

7. TTaxes [IINNVVEERRSSEE]

1.1.ResourceResource CostCost [wages & raw materials[wages & raw materials]] [Inverse][Inverse]

WagesWages Raw MaterialsRaw Materials

SSIf resource cost

decreases supply

Increases[making more $]

If resource cost

increases supply

Decreases[making less $]

SSSS

PP

RResource CCost [wages & raw materials] [inverseinverse]

58. Increase in wages (increases/decreases) supply.

Ex: A decrease in the price of computer chips

(increases/decreases) the supply of computers.

S1

P

S2 S3

P1

P1

QS1QS1

BroccoliBroccoli““Substitutes in production”Substitutes in production”I only have I only have

200 acres200 acres

SCornCorn SS11

PP

SS22

QS1QS1

SS11

PPSS22

S CornCornProducers want to produce more of the good where price is increasing,Producers want to produce more of the good where price is increasing,

or at least, where the price is not going down.or at least, where the price is not going down.

BroccoliBroccoli

P2

QS2QS2

P2

QS2QS2

AAlternative Output price changes [inverseinverse]

57. If the price of corn decreases, the supply of broccoli (increases/decreases).

S3 S1 S2

P

Supply of broccoliSupply of broccoli

PP

SS11 SS22

This lowers production costs & increases “S”.increases “S”.Ex: Suppose a new milking machine called ““The Invisible Hand”The Invisible Hand” has a very soothing effect on cows; cows find the new machine so “udderly”“udderly” delightful that they produce 30% more milk30% more milk. This technological advance will cause a shift to the rightshift to the right. 54

““Can’t wait till Can’t wait till milking time.”milking time.”

The cow floats on its own pocket ofwater, as the water bed fits each fits each bodybody. They are “cool in summer “cool in summer and warm in the winter”and warm in the winter”.. They are They are filled with 18 gallons of water and covered with thick rubber matsthick rubber mats – undulated when the 1,400 pound cows1,400 pound cows shifted their weight.

By conforming to the shape of the cows, the beds give the cows a more more comfortablecomfortable rest. They reduce wear and tearreduce wear and tear on the cows’ joints & prevent prevent swelling andswelling and burningburning of hockshocks (ankles). The cows pressure points, the knees and hocks (ankles)(ankles) float on the surface preventing hair loss, skinpreventing hair loss, skin abrasions, abrasions, andand swollen hocksswollen hocks. Because the cow’s utter floats on top of theutter floats on top of the waterbed and is not crushed against a solid bed surface,waterbed and is not crushed against a solid bed surface, thethe cow’scow’s udder received better blood flowudder received better blood flow..The cows appear to be lazyappear to be lazy because they lie down for 6-8 hours a day to digest food. However, there is a lot of work going onlot of work going on inside their bodies. The cow’s udder extracts nutrients from blood to produce milk. 500 500 gallons of blood have to circulate thru a cow’s udder to produce gallons of blood have to circulate thru a cow’s udder to produce nutrients for one gallon of milk.”nutrients for one gallon of milk.” The cows wait for a shot at the water beds. The first onesfirst ones who come back from the milking parlor fill those fill those water bed stalls firstwater bed stalls first. . The otherThe other late-arriving cows late-arriving cows say,say,

Technological Breakthrough – Cow WaterbedsTechnological Breakthrough – Cow Waterbeds““500500 gallons of blood gallons of blood have to circulate thru a cow’s have to circulate thru a cow’s udder to produce nutrients for udder to produce nutrients for one gallonone gallon of milk of milk.”.”

How many?How many?

““Mooooooovvvvvveeeeee over, give me that water bed.”Mooooooovvvvvveeeeee over, give me that water bed.”

Waterbedsforcows.comWaterbedsforcows.com

56. If more firms enter an industry, the supply curve will shift to the (left/right).

• When the American Basketball League began play in 1968, there was a (bigger/smaller)

supply of basketball games each week.

60. A new professional football league will (increase/decrease) the supply of football games.

SS33 SS1 1 SS22

PP

S1PP

Q

$2.00$2.00

Supply decreased when Supply decreased when the number of suppliers the number of suppliers was reduced.was reduced.

If the number of firms If the number of firms in the market in the market increases, Supply will increases, Supply will also increase.also increase.

SS22

SS33

QSQS11QSQS22 QSQS33

59.59. If oil producers expectexpect future oilfuture oil prices prices toto declinedecline, they will (increase/decrease) current production.

SS11

Oil PricesOil Prices

expectedexpected to decreaseto decrease

[“INVERSE”][“INVERSE”]

PP

SS22

If oil producers expect future oil prices to expect future oil prices to increaseincrease, they will (increase/decrease) current production.

SS22


expected expected to increaseto increase

SS33[Direct][Direct]

PP

Free money from the government (subsidiessubsidies) induces suppliers to supply more.

SS11 SS22

If subsidies are taken away, then suppliers are losingmoney and will decrease supply.

SS33[Inverse][Inverse]

PP

If business have their taxes decreasedtaxes decreased,it moves the supply curve to the right.

SS11 SS22

55. If business have their taxes increasedtaxes increased, it moves the supply curve to the (left/right).

I’m losingI’m losingprofits.”profits.”

Individual Supply Can Individual Supply Can IncreaseIncrease or or DecreaseDecrease

6

5

4

3

2

1

0

Quantity Supplied (bushels per week)

Pri

ce (

per

bu

shel

)

P Qs

$5

4

3

2

1

60

50

35

20

5

IndividualSupply

P

Q

SS11

SS22

SS33

2 4 6 8 10 12 14

Change in Supply [“RATNEST”]

1. Decrease in resource cost2. Alt. output price decrease 3. Technological change4. Increase in # of suppliers5. Producer exp. of price decrease6. Increase in subsidies7. Decrease in taxes

1. Increase in resource cost2. Alt. output price increase 3. Technological decrease4. Decrease in # of suppliers5. Producer exp. of price increase6. Decrease in subsidies7. Increase in taxes

““S” S” is ais a whole bunch whole bunch ofof

QS’s strung together.QS’s strung together.

DD11 DD22 SS

PP11

PP22

QQ11 QQ22

Shortage

Increase in DemandIncrease in Demand[For clownfish after “Finding Nemo”][For clownfish after “Finding Nemo”]

DD22

SS

PP11

PP22

QQ22 QQ11

DD11

Surplus

D S1

P1

QQ11

PP22

QQ22

SS22

ShortageShortage

DD SS11

PP11

QQ22

PP22

QQ22

SS22SurplusSurplus

$2.70$2.70 1.351.35

DD22

With Much Higher Gas Prices, What With Much Higher Gas Prices, What Happens In The SUV/RV MarketHappens In The SUV/RV Market

SS11

PP11

PP22

QQ22 QQ11

DD11 8 8 MPGMPG

SurplusSurplus QSQSQDQD

Four PossibilitiesFour Possibilities

DD11 DD11SS

AA BB

CCDD

Increase inIncrease insupplysupply of of gasgas

Slide RuleSlide RuleAfter introductionAfter introduction

of calculatorof calculator

SSDD11

DD22

[TIMER][TIMER]

[RATNEST][RATNEST]

““D” for flagD” for flagafter 9/11after 9/11

““Increase in Demand”Increase in Demand”“Decrease in Demand”

““Increase in Supply”Increase in Supply”““Decrease in Suppy”Decrease in Suppy”

DDecreaseecrease in in““S” of gasS” of gas

DD PP QQ DD PP QQ

SS QQ PPPP SS QQDD

SS11

DD

SS11SS22

$1.85$1.85

$1.00$1.00

QQ11 QQ22 QQ2 2 QQ11

$1.85$1.85SS11

$1.00$1.00

PP22

PP11PP11

PP22


AfterAfter “Looking “LookingFor Nemo”For Nemo”

Decrease in “QS”Decrease in “QS”[caused by a “decrease in price”][caused by a “decrease in price”]

Increase in “QS”Increase in “QS”[caused by an “increase in price”][caused by an “increase in price”]


Change in “S” [RATNEST]Change in “S” [RATNEST]

1. Non-price1. Non-price2. Whole curve2. Whole curve3. Shift3. Shift[“Time passes”][“Time passes”]

What could cause an “increase in supply?”What could cause an “increase in supply?” 4. IncreaseIncrease in numbernumber of of producersproducers1. DecreaseDecrease in resource costresource cost [wages/raw materials] 5. IncreaseIncrease in technologytechnology2. DecreaseDecrease in the price of an alternative outputalternative output for “X”“X” 6. IncreaseIncrease in subsidiessubsidies3. Producer expectationsProducer expectations of a price decreaseprice decrease 7. DecreaseDecrease in taxestaxes

PP11

PP22

QSQS11

PP11

PP22

QSQS11

SS SS

SS11 SS22SS11SS22

PPPP

““Increase in S”Increase in S” ““Decrease in S”Decrease in S”

QSQS22QSQS22

““IncreaseIncrease in in DD”” ““Decrease in Decrease in DD”” ““Increase in Increase in SS”” ““Decrease in Decrease in SS””

___1. Decrease in incomeincome on market for used carsused cars.___2. Decrease in incomeincome on market for new carsnew cars.___3. Consumer expectationsConsumer expectations about a price decreaseprice decrease.___4. Producer expectationsProducer expectations about a price decreaseprice decrease.___5. Increase in # of producers# of producers on the market for computerscomputers.___6. Increase in # of consumers# of consumers on the market for used carsused cars.___7. Increase in # of consumers# of consumers on the market for new carsnew cars.___8. Decrease in the price of iPodsiPods upon the market for iTiTune songsune songs.___9. Decrease in business taxesbusiness taxes on the market for computerscomputers.___10. Consumer expectationsConsumer expectations of a shortage of applesapples.___11. Decrease in resource costresource cost on market for computerscomputers.___12. Increase in price of wheatwheat upon market for corncorn.___13. Consumer expectationsConsumer expectations of a shortage of cell phones.___14. Producers expectationsProducers expectations about a price increase.___15. Increase in incomeincome on the market for iPod videosiPod videos.

BBBB

CCCCAA

AACCAA

DDCC

AA

AA

AA

AA

DD

D1 D2

(A)(A) (B)(B) (C)(C) (D)(D)

DD11

DD22

SS SS SS11 SS11SS22

SS22DD DD

TIMERTIMER RATNESTRATNEST

PP22 PP11 PP11PP22

PP11 P2P2 PP22PP11

QDQD1 1 QDQD22 QDQD22 QD1QD1 QDQD11 QD2 QD2 QDQD22 QD1 QD1

NS 41-53NS 41-5341. Supply – quantities producers offer at each (technique/price).42. The relationship between priceprice and QSQS is (direct/inverse) and the relationship between priceprice and QDQD is (direct/inverse) or opposite.43. The “law“law of of supply”supply” indicates that producers will offer (less/more) at higher prices.

44. In moving along a stable supply/demand curvemoving along a stable supply/demand curve, (income/price) is not held constant.

45. (Inelasic/Elastic) supply-when QS is very responsive to pricevery responsive to price.46. (Inelastic/Elastic) supply-when a change in price has little impact on QSlittle impact on QS.47. The 3-item test for elastic supplyelastic supply is: the item can be made quickly, it tends to be cheap, & it can be produced by (skilled/unskilled) workers.48. The 3-item test for inelastic supplyinelastic supply is: the item cannot be made quickly, it tends to be expensive, & (skilled/unskilled) workers.49. An example of inelastic supplyinelastic supply is (posters/computers/T-shirts).50. An example of elastic supplyelastic supply is (HDTV/computers/T-shirts).51. The supply curve for elastic supplyelastic supply is more (flat/vertical).52. The supply curve for inelastic supplyinelastic supply is more (flat/vertical).53. A decrease in the price of cattle feedcattle feed will cause the (D/S) curve for beefbeef to shift.

Bushels BushelsDemanded Corn Price Supplied

2626 $5 $5 46 46 3232 $4 $4 41 41 3737 $3 37 $3 37 4343 $2 $2 32 32 4848 $1 $1 29 29

61. Equilibrium priceEquilibrium price will be ($1/$2/$3/$4/$5). 62. If the priceprice in this market were $2$2, farmers (would/would not) be able to sell all their corn.63. If the price were initially $5price were initially $5, we would expect the price of corn supplied to (increase/decrease) as a result of the price change.

$$33$$22

$$55DD SS

2626 46463232 43433737

64. A price of $36$36 will result in a (shortage/surplus) of (50/100).

65. Price Price && quantity quantity will gravitate toward ($12 & 150/$24 & 100).

66. The highest price that buyers will be willing & able to pay highest price that buyers will be willing & able to pay for for 50 units50 units is ($12/$24/$36).

67. A price of $12$12 in this market will result in a (surplus/shortage) of (50/100).

00 5050 100 100 150150

$36$36

$24$24

$12$12

SSDD

EE

74. A decrease in incomeincome, if “X” is an inferior goodinferior good would (increase/decrease) (demand/supply), (increase/decrease) price, and (increase/decrease) quantity.75. A decrease in the number number of of consumersconsumers for product “X” will (increase/decrease) (demand/supply), (increase/decrease) price, and (increase/decrease) quantity.76. Producer expectationsProducer expectations that the price of “X”“X” will decrease sharply in the future will (incr/decr) (demand/supply), (incr/decr) price, & (incr/decr) quantity.77. A decrease in the price of a product which is a substitutesubstitute to “X”“X” will (incr/decr) (supply/demand), (incr/decr) price, (incr/decr) quantity.

68. Increase in the price of irrigation equipmentirrigation equipment [resource costresource cost] upon the market for wheatwheat is illustrated by diagram (A/B/C/D). 69. Increase in incomesincomes upon the market for spamspam is illustrated by diagram (A/B/C/D).70. SubsidySubsidy for cancer research being taken away is illustrated by diagram (A/B/C/D).71. Decrease in the price of MM&&MMss upon the market for SSnickersnickers is illustrated by (A/B/C/D).72. Decrease in worker wagesworker wages on the market for textiles is illustrated by (A/B/C/D).73. Increase in the price of camerascameras upon the market for filmfilm is illustrated by (A/B/C/D).

NS 68-77NS 68-77

SS22

P2P2EE22

DD22 SS22

DD22

EE22

SS22

QQ22DD22

SS22

QQ22

78. If demand increasesdemand increases and supply decreasessupply decreases, equilibrium price will (incr/decr/stay the same) & equilibrium quantity will (incr/decr/stay the same).79. If demand decreasesdemand decreases and supply increasessupply increases, equilibrium price will (incr/decr/stay the same) & equilibrium quantity will (incr/decr/stay the same). 80. If the supply and demand curves both increasesupply and demand curves both increase, equilibrium price will (incr/decr/stay the same) & equilibrium quantity will (incr/decr/stay the same). 81. If demand and supply curves both decreasedemand and supply curves both decrease, equilibrium price will (incr/decr/stay the same) & equilibrium quantity will (incr/decr/stay the same).

EE22

*Staying the same means indeterminateindeterminate, that is, the quantity could increaseincrease,

decreasedecrease, or stay the samestay the same, depending on the magnitude of the shiftsmagnitude of the shifts.

SS1D1DD2

EE2

P2P2

Price FloorPrice Floor – minimumminimum priceprice [creates surplusessurpluses]

.

$2.50$2.50

SP

Q0 1414 19 2424

D

SurplusSurplus

Such as:Minimum WageMinimum WageAgriculturalAgriculturalPrice SupportsPrice Supports

The price has to be IN IN the house. It can’tbe below the floor.

Some call agricultural pricesupports ““udderudder insanityinsanity.”.”

Price Floor-minimum pricePrice Floor-minimum price

QS exceeds QDQS exceeds QD

Millions of gallons per month

1.901.90P

rice

per

gal

lon

Pri

ce p

er g

allo

nEquilibrium price for milk

Price CeilingPrice Ceiling - maximum maximum priceprice [creates shortagesshortages]

7

SP D

ShortageShortage

Such as:Rent controlsRent controls in NYC in NYCWartime price controlsWartime price controlsRock concert pricesRock concert pricesSuper Bowl ticketsSuper Bowl tickets

The price has to be inin the house. It can’t be above the ceiling.

Super Bowl TSuper Bowl Ticketicket P Pricesrices E-BayE-Bay

1967 - $12.001967 - $12.00 2007 - $6-7002007 - $6-700 $2,700-10,000$2,700-10,000

[end zone - mid-field][end zone - mid-field]

Dolphins Stadium

NFL could raise the price & make another $150 M but the average man couldn’t attend.

2.52.5 33

Price Ceiling-maximum pricePrice Ceiling-maximum price

QD exceeds QSQD exceeds QS

Millions Millions of of Dwellings RentedDwellings Rented

$2,000$2,000

1,2001,200

3.53.5

NYCNYCRent ControlsRent Controls


DD11 DD11SS

AA BB

CCDD




SSDD11

DD22

[TIMER][TIMER]

[RATNEST][RATNEST]





DD PP QQ DD PP QQ

SS QQ PPPP SS QQDD

SS11

DD

SS11SS22

$1.85$1.85

$1.00$1.00


$1.85$1.85SS11

$1.00$1.00

PP22

PP11PP11

PP22



Banana Supply & DemandBanana Supply & Demand

Qo

DD11

Quantity

Pri

ce (

per

po

un

d)

SS11SS22

P

QQ11QQ22

PP11

PP22

Crop Freezing Crop Freezing Damage…Damage…

Patriotism Surge after 9/11…Patriotism Surge after 9/11…

American Flags After 9-11American Flags After 9-11

Qo

DD11

Pri

ce (

per

fla

g)

S1P

QQ11 QQ22

PP11

PP22

DD22

___7. Increase in the price of Apple’s iPodApple’s iPod VideoVideo on the market for Microsoft’s ZuneMicrosoft’s Zune. ___8. Increase in the price of teatea on the market for lemonlemon.___9. Increase in business taxestaxes on the market for SUVsSUVs.___10. Consumers expectConsumers expect a shortage of cell phonescell phones.

““TIMER”[D]TIMER”[D] or or “RATNEST”[S]“RATNEST”[S]

___1. Increase in incomeincome on the market for camcorderscamcorders. ___2. Increase in # of consumers# of consumers on market for computers.___3. Producer expectationsProducer expectations about a price increase.___4. Consumer expectationsConsumer expectations about a price increase.___5. Increase in # of producersproducers on market for digital cameras.___6. Increase in resource costresource cost on the market for bagels.

AAAADDAACCDDAA

BBDDAA

1. An increase in incomeincome if Microsoft’s Zune is aMicrosoft’s Zune is a normal goodnormal good would: a. increase D, increase P, & increase Q. b. increase D, increase P, & decrease Q. c. increase S, increase P, & increase Q. d. decrease D, increase P, & increase Q.

2. A decrease in the price of resourcesdecrease in the price of resources used to produce laptops will: a. increase S, increase P, & increase Q. b. increase D, increase P, & increase Q. c. decrease S, decrease P, & decrease Q. d. do none of the above

3. Decrease in price of butterbutter on the market for the substitutesubstitute margarinemargarine: a. increase D, increase P, & decrease Q. b. decrease D, decrease P, & increase Q. c. decrease D, increase P, & decrease Q. d. do none of the above

4. An improvement in technologyimprovement in technology used to produce DVDs will: a. decrease S, increase P, & decrease Q. b. decrease S, increase P, & increase Q. c. increase S, decrease P, & increase Q. d. decrease D, decrease P, & decrease Q.

5. A decrease in the number of consumersdecrease in the number of consumers for Fuzzy Wuzzies: a. decrease S, decrease P, & decrease Q. b. increase D, increase P, & increase Q. c. decrease D, decrease P, & decrease Q. d. decrease D, decrease P, & increase Q.

Effect of Changes in “D” or “S” on Price and QuantityEffect of Changes in “D” or “S” on Price and Quantity

EE11

EE22 EE11

EE22

EE11

EE22

EE22

EE11

6. A decrease in tastetaste for Fuzzy Wuzzies would: a. increase D, increase P, & increase Q. b. decrease D, increase P, & decrease Q. c. increase S, increase P, & increase Q. d. decrease D, decrease P, & decrease Q.

7. A reduction in the number of firmsnumber of firms producing laptops: a. increase S, increase P, & increase Q. b. increase D, increase P, & increase Q. c. decrease S, increase P, & decrease Q. d. decrease S, decrease P, decrease Q.

8. An increase in the price of pancakes, a complementcomplement for syrup would: a. increase D, increase P, & decrease Q. b. decrease D, decrease P, & increase Q. c. decrease D, decrease P, & decrease Q. d. do none of the above

9. A decrease in incomeincome upon the market for spam would: a. decrease S, increase P, & decrease Q. b. decrease S, increase P, & increase Q. c. increase D, decrease P, & increase Q. d. increase D, increase P, & increase Q.

10. Consumer expectationsConsumer expectations that the price of PSP will increase by 50% in the future will: a. decrease S, decrease P, & decrease Q. b. increase D, increase P, & increase Q. c. decrease D, decrease P, & decrease Q. d. decrease D, decrease P, & increase Q.


[D[D –– ““TIMER”; QD TIMER”; QD –– price change of product (inverse)]price change of product (inverse)]

___1. Which of the following will cause an "Increase in Demand""Increase in Demand" for computers? a. decrease in price of computers b. decrease in income c. increase in income d. increase in the price of compu ters

___2. Which of the following will cause an "Increase in QD""Increase in QD" for computers? a. decrease in price of computers b. decrease in income c. increase in income d. increase in price of computers

___3. Which of the following will cause a "Decrease "Decrease in Demand"in Demand" for plasma TVs? a. increase in price of plasma TVs b. decrease in price of plasma TVs c. decrease in # of consumers(marketsize)

___4. Which of the following will cause a "Decrease in QD""Decrease in QD" for plasma TVs? a. increase in price of plasma TVs b. decrease in price of plasma TVs c. decrease in # of consumers (market size)

[S[S –– ““RATNEST”;RATNEST”; QSQS –– price change of product (direct)]price change of product (direct)] ___5. Which of the following will cause an "Increase in Supply""Increase in Supply" for DVDs?

a. decrease in price of DVDs c. decrease in resource cost b. increase in price of DVDs d. expectations of price increase

___6. Which of the following will cause an "Increase in QS""Increase in QS" for DVDs? a. decrease in price of DVDs c. decrease in resource price b. increase in price of DVDs d. expectations of price increase

___7. Which of the following will cause a "Decrease in Supply""Decrease in Supply" for DVDs? a. increase in price of DVDs c. subsidies to suppliers of DVDs b. decrease in price of DVDs d. expectations of price increase

___8. Which of the following will cause a "Decrease in QS""Decrease in QS" for digital cameras? a. increase in price of cameras c. subsidies to suppliers of cameras b. decrease in price of cameras d. expectations of digital camera price increase

CC

AA

CC

AA

CC

BB

DD

BB

d. increase in price of computers

c. decrease in # of consumers


___1. Increase in price of computers computers on market for software.software.___2. Decrease in auto worker wagesauto worker wages on the market for autosautos.___3. Decrease in the price Pepsi Pepsi on the market for CokeCoke.___4. DDecrease in the price ofecrease in the price of computer chips computer chips on theon the computer computer marketmarket.

___5. Increase in price of fertilizerfertilizer on the market for wheatwheat.___6. Decrease in government subsidiessubsidies on market for AIDS researchAIDS research.

___7. Increase in incomesincomes on market for used clothingused clothing.___8. A new professional soccernew professional soccer league is formed upon the market for soccer gamessoccer games. ___9. Producer expectationsProducer expectations that the price of orange juice will increase 30% in 3 weeks? ___10. Consumer expectationsConsumer expectations that the price of orange juice will increase 30% in 3 weeks?___11. Decrease in price of computerscomputers upon market for monitorsmonitors?

BBCC

CCDDDD

CC

DD

AA

BB

BB

D1 D2

(A)(A) (B)(B) (C)(C) (D)(D)

DD11

DD22

SS SS SS11SS11SS22

SS22DD DD


PPPP PP PP

AA

Review forReview forDemand and Demand and

SupplySupply

““You da man”You da man”

TheThe “Gangsta “Gangsta CarCar” ”

BusinesseBusinessess

Product MarketProduct Market

Resource MarketResource Market

Which flow represents?Which flow represents?A. Consumer expenditures?A. Consumer expenditures?B. Goods and services?B. Goods and services?C. Land, labor, capital, and C. Land, labor, capital, and entrepreneurial ability?entrepreneurial ability?D. Rent, wages, interest, D. Rent, wages, interest, and profits?and profits?HouseholdsHouseholds

33

44

221144

33

LaborLabor forfor ““Gangsta Cars”Gangsta Cars”

ChryslerChrysler300 “Gangsta Car300 “Gangsta Car

22

BusinessesBusinessesBusinesses

ChryslerChrysler PlantPlant

11

Circular FlowCircular Flow

The Circular-Flow The Circular-Flow DiagramDiagram

HouseholdsHouseholds

Product MarketProduct Market

Resource MarketResource Market

1

2

3

4

Which Flow RepresentsWhich Flow Represents??A. Goods/services?A. Goods/services?B. Consumer expenditures?B. Consumer expenditures?C. Land, labor, capital andC. Land, labor, capital and entrepreneurial ability?entrepreneurial ability?D. Rent, wages, interestD. Rent, wages, interest, , and profits?and profits?BBusinessesusinesses

LaborLabor

Fuzzy WuzzyFuzzy Wuzzy

443311

22

BusinessesBusinessesBusinesses

Consumption GoodsConsumption Goods

41. At what letter is there unemploymentunemployment [recessionrecession]?42. What letters represent resources being used in their most productive mannermost productive manner? [full employment, full production, and best available technology]43. What letter represents an improvement in technologyimprovement in technology, therefore a new PPCnew PPC frontier line?44. The (straight line/curve) illustrates the “law of increasing cost”“law of increasing cost”??45. The (straight line/curve) illustrates the “law of constant cost.”“law of constant cost.”46. At what letter would there be the most economic growth inmost economic growth in thethe futurefuture if a country were producing there nowproducing there now? What is the opportunity costopportunity cost when moving from “C”“C” toto “A”“A”; ; when moving from BB to to CC; and do we have to give anything updo we have to give anything up when moving frommoving from DD to to BB?

DD

A, B, A, B, oror CC

EE

AAConsumptionConsumption

CapitalCapitalnono

DD

AABB

CC

Cap

ital G

ood

sC

ap

ital G

ood

sEEPPCPPC

More or better resources or better technologyMore or better resources or better technology

QDQD22QDQD11

PricePrice QDQD

InverseInverse relationshirelationshipp

$299.00$299.00

DD Reasons For Reasons For Downsloping “D”Downsloping “D” Curve Curve1. Income EffectIncome Effect –current buyers buy more.2. Substitution EffectSubstitution Effect– new buyers now purchase.3. Diminishing MarginalDiminishing Marginal UtilityUtility - because buyers of successive units receive less marginal utility, they will buy more only when the price is lowered.

Change in QDChange in QD1. Price changePrice change2. MovementMovement [up/down the demand curve]3. Point to pointPoint to point [along the curve]

iPod Touch [8 GB]iPod Touch [8 GB]

““D”D” refers to the ““whole curvewhole curve”.”. [“all prices”“all prices”]““QD”QD” refers to a “point on the curve”“point on the curve”

based on a “particular price.”“particular price.”

- As price increases- As price increases

… …Q S also increasesQ S also increases

DirectDirect relationship between PP & QSQS

PP22

PP11

QSQS11

SS

PP11

PP22

SS

“Take it. We are losing money.”QS1QS1

-As priceAs price decreasesdecreases… … QS QS alsoalso decreasesdecreases

“Let’s make more.”

QSQS22

QS2QS2

““Demand Shifters” [TIMER]Demand Shifters” [TIMER]1. 1. TTaste [aste [directdirect]]2. 2. IIncome [normal-ncome [normal-directdirect] [inferior-] [inferior-inverseinverse]]3. 3. MMarket Size [number of consumers-arket Size [number of consumers-directdirect]]4. 4. EExpectations [of consumers about future *price-xpectations [of consumers about future *price-directdirect, , about future availability-about future availability-inverseinverse, or about future income–, or about future income–directdirect..5. 5. RRelated Good *Prices [substitutes-elated Good *Prices [substitutes-directdirect] [complements-] [complements-inverseinverse]]

Change in “D” [curve]Change in “D” [curve]1. Non price changeNon price change [[“TIMER”“TIMER”]]2. Whole “D” curve shiftsWhole “D” curve shifts[There is a change in “QD” but it isnot caused by a change in “price.”[QD-”single price”QD-”single price”; D-”all prices”D-”all prices”]

ComplementComplement[[inverseinverse]]

SubstituteSubstitute

[[DirectDirect]]ButterButter BreadBread BagelsBagels

PP

DD33 DD11 DD33

QDQD33 QDQD11 QDQD22

DD11 DD22

PPPP11

QDQD11 QDQD22

PP22

DD11

DD22

DD

PP

DD11 DD22

PP

QDQD11 QDQD22

DD11 DD22

PP

QDQD11 QDQD22

More incomeMore incomeresults inresults in

more demandmore demandfor new cars;for new cars;less demandless demandfor used cars.for used cars.

New CarsNew Cars Used CarsUsed Cars

Less incomeLess incomeresults inresults in

more demandmore demandfor used cars;for used cars;less demandless demandfor new cars.for new cars.

DD11 DD22

PP

QDQD11 QDQD22

More demand More demand for both newfor both newand used carsand used cars

New CarsNew Cars

Used CarsUsed Cars

This is what we told 1 billion 1 billion ChineseChinese, as new potential new potential consumersconsumers, when we opened

trade relationstrade relations with them in the 70s.

DD11 DD22

PP

QDQD11 QDQD22

If Steve Jobs responds to iRateiRate customers who

bought the iPhoneiPhone at $599 and says, “iSorryiSorry,we will raise the price back to $599 in 3 weeks.”

iPhoneiPhone

$399$399

Buy it now to save money.Buy it now to save money.

DD11 DD22

PP

QDQD11 QDQD22

Let’s say that we are coming out of recessioncoming out of recession & consumersfeel secure about their jobs. [Positive future incomePositive future income]

DD11

DD22

PP

QDQD11QDQD22

Let’s say that we are going into a recessiongoing into a recession and consumersdon’t feel secure about their jobs. [NegativeNegative future income future income]

ComplementComplement[[InverseInverse]]

SubstituteSubstitute[[DirectDirect]]

MilkMilk CerealCereal Pop TartsPop Tarts

DD11 DD22

PPPP11

QDQD11

P2

DD11

DD22

DD

PP

QDQD22

1.1.ResourceResource CostCost [wages & raw materials[wages & raw materials]] [Inverse][Inverse]

WagesWages Raw MaterialsRaw Materials

SSIf resource cost

decreases supply

Increases[making more $]

If resource cost

increases supply

Decreases[making less $]

SSSS

PP

P1

P1

QS1QS1

BroccoliBroccoli““Substitutes in production”Substitutes in production”I only have I only have

200 acres200 acres

SCornCorn SS11

PP

SS22

QS1QS1

SS11

PPSS22

S CornCornProducers want to produce more of the good where price is increasing,Producers want to produce more of the good where price is increasing,

or at least, where the price is not going down.or at least, where the price is not going down.

BroccoliBroccoli

P2

QS2QS2

P2

QS2QS2

SS

Because cows produce moremilk, farmersdon’t have to have as manycows.[saves $]

SS

PP

We love these cow waterbeds We love these cow waterbeds because webecause we get get better better blood flowblood flow and can and can produce 30% more milkproduce 30% more milk..

Supply curvemoves “udderly”“udderly”to the right.

Less skin abrasionsso happier cowsproduce more milk.

Mooooove Mooooove over and give me thatover and give me that waterbed. waterbed.

Waterbedsforcows.com

NFLNFL

S1PP

Q

$50$50

SupplySupply of of FB games increased when the XFL was FB games increased when the XFL was formed. formed.

SS33

QSQS QSQS

XFL XFL in 2001in 2001

Because of the Because of the XFL’s XFL’s cheerleaderscheerleadersmany called thismany called thisleague, not theleague, not the

XFL, but theXFL, but theSupply of FB games each week

XXXFLXXXFL XFL [Extreme Football League]

8 new teams8 new teams

If oil producers expectexpect future oilfuture oil prices toprices to declinedecline, they will (increase/decrease) current production.

SS11


expectedexpected to decreaseto decrease

[“INVERSE”][“INVERSE”]

PP

SS22

If oil producers expect future oil prices to expect future oil prices to increaseincrease, they will (increase/decrease) current production.

SS22


expected expected to increaseto increase

SS33[Direct][Direct]

PP

Free money from the government (subsidiessubsidies) induces suppliers to supply more.

SS11 SS22

If subsidies are taken away, then suppliers are losingmoney and will decrease supply.

SS33[Inverse][Inverse]

PP

If business have their taxes decreasedtaxes decreased,it moves the supply curve to the right.

SS11 SS22

If business have their taxes increasedtaxes increased, it moves the supply curve to the left.

I’m losingI’m losingprofits.”profits.”

Qo

$5

4

3

2

1

P QD

$54321

1020355580

Price

Quantity of Corn

CORN Plot the PointsPlot the Points

10 20 30 40 50 60 70 80

GRAPHING DEMANDGRAPHING DEMAND[“Change [“Change in in QD”]QD”]

$100$90$80$70$60$50$50$40$30$20$10

0

20 4040 6060 7575 100 120120 140 160160 180180 200200 220

Quantity (units of any good or service)

7070 175175

120 =120120 =120

QD=QSQD=QSEE

QDQD QSQS

QDQD QSQS

QSQS QDQD

QSQS QDQD

DD SSPrice FloorPrice Floor

SurplusSurplus

Price CeilingPrice CeilingShortageShortage

DollarDollarPricePrice

If If QS>QDQS>QD; ; Price DecreasesPrice Decreases

If If QS<QDQS<QD; ; PPricerice Increases IncreasesIf If QD=QSQD=QS; ; PricePrice SStays tays SSameame


DD11 DD11SS

AA BB

CCDD




SSDD11

DD22

[TIMER][TIMER]

[RATNEST][RATNEST]





DD PP QQ DD PP QQ

SS QQ PPPP SS QQDD

SS11

DD

SS11SS22

$1.85$1.85

$1.00$1.00


$1.85$1.85SS11

$1.00$1.00

PP22

PP11PP11

PP22



““Change in QD”Change in QD” ““Change in QS”Change in QS”

““Change in Demand”Change in Demand”

““Chg in Supply”Chg in Supply”

Non-Price ChangeNon-Price ChangeWhole Curve ShiftsWhole Curve Shifts

[What is not heldconstant in these 4?]

Price ChangePrice Change

PointPoint to to PointPoint

MovementMovement[[IINNVVEERRSSEE]] [DIRECT][DIRECT]

PP11

PP22

PP22

PP11

QDQD1 1 QDQD22

DD SS

QDQD2 2 QDQD11

QSQS11 QSQS22

QSQS2 2 QSQS11

PP11

PP22

PP22

PP11

SS

D1

DD22DD11

DD22

SS11S2

SS22 SS11

QQ11 QQ22 QQ22 QQ11


Price Changes forPrice Changes for SubstitutesSubstitutes && ComplementsComplementsSubs - DirectSubs - Direct

Dr Pepper

Complements -Complements - InverseInverse

CokeCokePP11

PP22

PP11

PP22

QDQD11 QDQD22

DD

DD DD11

D2D2

DD11 DD22

Alternative Outputs -Alternative Outputs - InverseInverseSS S1

SS22PP11

PP22 PP

QSQS22 QSQS11

BroccoliBroccoli CornCorn

HelmetsHelmets

MotorcyclesMotorcyclesPP

PP


___1. Decrease in the price of printers printers on the market for cartridgescartridges..

___2. Increase in worker wages worker wages on the market for computerscomputers.___3. Increase in the price Dr. Pepper Dr. Pepper on the market for CokeCoke.___4. InIncrease in the price ofcrease in the price of computer chips computer chips on theon the computer computer marketmarket.

___5. Decrease in price of fertilizerfertilizer on the market for wheatwheat.___6. Increase in government subsidiessubsidies on the market for AIDS researchAIDS research.

___7. Decrease in incomesincomes on the market for used clothingused clothing.___8. New professional hockeyNew professional hockey league is formed upon the market for hockey gameshockey games. ___9. Producer expectations Producer expectations that the price of orange juice will decrease 30% in 3 weeks? ___10. Consumer expectations Consumer expectations that the price of orange juice will decrease 30% in 3 weeks?___11. Decrease in price of computerscomputers upon market for monitorsmonitors?

AADD

DDCCCC

CC

CC

BB

AA

AA

D1 D2

(A)(A) (B)(B) (C)(C) (D)(D)

DD11

DD22

SS SS SS11 SS11SS22

SS22DD DD


PP PP PP PP

AA

1. A decrease in incomeincome if spamspam is an inferior good would: a. increase D, increase P, & increase Q. b. increase D, increase P, & decrease Q. c. increase S, increase P, & increase Q. d. decrease D, increase P, & increase Q.

2. An increase in the price of resourcesincrease in the price of resources used to produce DVD Players will: a. increase S, increase P, & increase Q. b. increase D, increase P, & increase Q. c. decrease S, decrease P, & decrease Q. d. decrease S, increase P, & decrease Q.

3. Decrease in price of butterbutter on the market for the substitute margarinemargarine: a. increase D, increase P, & decrease Q. b. decrease D, decrease P, & increase Q. c. decrease D, increase P, & decrease Q. d. do none of the above

4. An improvement in technologyimprovement in technology used to produce DVDs will: a. decrease S, increase P, & decrease Q. b. decrease S, increase P, & increase Q. c. increase S, decrease P, & increase Q. d. decrease D, decrease P, & decrease Q.

5. An increase in the number of consumersincrease in the number of consumers for Fuzzy Wuzzies: a. decrease S, decrease P, & decrease Q. b. increase D, increase P, & increase Q. c. decrease D, decrease P, & decrease Q. d. decrease D, decrease P, & increase Q.


6. An increase in tastetaste for Fuzzy Wuzzies would: a. increase D, increase P, & increase Q. b. decrease D, increase P, & decrease Q. c. increase S, increase P, & increase Q. d. decrease D, decrease P, & decrease Q.

7. A reduction in the number of firmsnumber of firms producing laptops: a. increase S, increase P, & increase Q. b. increase D, increase P, & increase Q. c. decrease S, increase P, & decrease Q. d. decrease S, decrease P, decrease Q.

8. A decrease in the price of pancakespancakes, a complementcomplement for syrupsyrup would: a. increase D, increase P, & decrease Q. b. decrease D, decrease P, & increase Q. c. Increase D, increase P, & increase Q. d. do none of the above

9. An increase in incomeincome upon the market for used carsused cars would: a. decrease S, increase P, & decrease Q. b. decrease S, increase P, & increase Q. c. increase D, decrease P, & increase Q. d. decrease D, decrease P, & decrease Q.

10. Consumer expectationsConsumer expectations that the price of Nintendo DS will increase by 50% in the future will: a. decrease S, decrease P, & decrease Q. b. increase D, increase P, & increase Q. c. decrease D, decrease P, & decrease Q. d. decrease D, decrease P, & increase Q.


[D [D –– ““TIMER”; QDTIMER”; QD –– price change of product (inverse)]price change of product (inverse)]

___1. Which of the following will cause a ““Decrease in Demand"Decrease in Demand" for Seven jeans? a. decrease in price of Seven jeans b. decrease in income c. increase in income d. increase in the price of compu ters

___2. Which of the following will cause a ““Decrease in QD"Decrease in QD" for Seven jeans? a. decrease in price of Seven jeans b. decrease in income c. increase in income d. increase in price of Sevens

___3. Which of the following will cause an “ “Increase Increase in Demand"in Demand" for Seven jeans? a. increase in price of Seven jeans b. decrease in price of Seven jeans c. decrease in # of consumers(marketsize)

___4. Which of the following will cause an “ “Increase in QD“ Increase in QD“ for Seven jeans? a. increase in price of Seven jeans b. decrease in price of Seven jeans c. decrease in # of consumers(marketsize)

[S [S –– ““RATNEST”; QSRATNEST”; QS –– price change of product (direct)]price change of product (direct)] ___5. Which of the following will cause a ““Decrease in Supply"Decrease in Supply" for the Zune?

a. decrease in price of the Zune c. decrease in resource cost b. increase in price of the Zune d. expectations of price increase

___6. Which of the following will cause a ““Decrease in QS"Decrease in QS" for the Zune? a. decrease in price of the Zune c. decrease in resource price b. increase in price of the Zune d. expectations of price increase

___7. Which of the following will cause an ““Increase in Supply"Increase in Supply" for the Zune? a. increase in price of the Zune c. subsidies to suppliers of the Zune b. decrease in price of the Zune d. expectations of price increase

___8. Which of the following will cause an “ “Increase in QS"Increase in QS" for the Zune? a. increase in price of the Zune c. subsidies to suppliers of the Zune b. decrease in price of the Zune d. expectations of a Zune price increase

BB

DD

CC

BB

DD

AA

CC

AA

d. increase in price of Sevens

c. increase in # of consumers

7 Revised

of the Zunefor the Zune

for the Zune

for the Zune

Practice “Supply Quiz”Practice “Supply Quiz” 1. Which would cause a “decrease in supply”“decrease in supply” for MP3 Players? a. decrease in the price of MP3s b. increase in the price of MP3s c. decrease in MP3 resource cost d. producer expectations of a price increase

2. Which would cause a “decrease in QS”“decrease in QS” for MP3s? a. decrease in the price of MP3s b. increase in the price of MP3s c. decrease in MP3 resource cost d. producer expectations of a price increase

3. Which would cause an “increase in supply”“increase in supply” for MP3 Players? a. decrease in the price of MP3 Players b. increase in the price of MP3s c. decrease in MP3 resource cost d. producer expectations of a price increase4. Which would cause an “increase in QS”“increase in QS” for MP3s? a. decrease in price of MP3s b. increase in price of MP3s c. decrease in MP3 resource cost d. producer expectations of a price increase

5. An increase in the price of asparagus will (increase/decrease)

the supply of the alternative outputalternative output peas.6. A 50% decrease in the price of “computer chips”“computer chips” will (increase/decrease) the (supply/QS) for “computers”.“computers”.7. Which would cause an “increase in supply”“increase in supply” for MP3 Players? a. increase in wages for MP3 Player workers. b. subsidies($100 per computer) are given to MP3 Player companies. c. subsidies for MP3 Player makers being taken away.

supply for-students

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