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Explain what happens to the equilibrium price and quantity of apples (, , or stays the same)
when the following happens. Also note which curve is affected (S or D).
1
Practice Exercise on Shifting Supply and Demand
Economics
Dr. Claudia Strow
I. In the following situations evaluate what happens to supply or demand for new homes in
Bowling Green and how this affects the equilibrium price and quantity exchanged. First analyze
which curve(s) are affected and in which direction it shifts. Then state what happens to the price
and quantity of new homes.
Hint: you may find it helpful to graph the shifts in order to determine how price and quantity
are affected.
Curve price quantity
(S or D) (,, no change) (,, no change)
1. Shipping costs for new home suppliers fall
due to lower gas prices
2
II. In the following situations evaluate what happens to supply or demand for domestically
produced new cars and how this affects the equilibrium price and quantity exchanged. First
analyze which curve(s) are affected and in which direction it shifts. Then state what happens to
the price and quantity of new cars. Hint: you may find it helpful to graph the shifts in order to
determine how price and quantity are affected.
curve price quantity
7. The price of car insurance rises and at the same time new car
manufacturers expect the prices of new cars to rise in the future.