MARKET ANALYSIS WORKSHEET Dr: Skivinske Assume each of the markets (listed on the left below) to be in equilibrium (note: this vill-not be the case with a surplus ar shortage necessatiy). Thea estimate (Le, edict) the effects on price (P) and quantity (Q) of the “shocks” (listed on the right felow) on the given mitket (You must use my list of shift varlables to do (ie excrete). “Your anawero shoul Took like the example, | YOU ARE ENCOURAGED TO WORK IN GROUPS AND CHECK YOUR ANSWERS WITH THE ANSWER SHEET IN THE GLASS CASE (15 floor 2000 bid). ‘EVENTS (SHOCKS } A.natural disaster destroys most ‘of Brazil's coffee crop. Answer: Supply will decrease (SxS) Price increase (PP) Qs wll, decrease (21-0) SVS Miscellaneous (A S) ‘The Cost of legal settlements is 2 Cigarette. . Passed on to Firmsoll and gas Beet "Luxury" Several firms leave the market due 10 mergers, Consumers react positively to new “eat more beef “commercials ‘The government places a Luxury fon these cats6 Cars. Roboties assembly is introduced to the industry 1. Green beans. The price of green peas increases 8. Megat drugs. Penalties (fines and jail terms) are. increased for both users and dealers (hint: Is this good or bad).9, Natural gas, ‘The government sets a price Moor (hint: APim 1) 10. Burgers. Beet prices decrease 11, Contumer goods. ‘Texas passes an income tax?12, Lite ® beer, Miller Brewing starts a (1)new advertising campaign (they are pending money on advertising), which Q) is successful Geonsumers ate. positive) Also, AD > aS, 13, Prescription drugs. A price ceiling is imposed. 14, Personal computers Costs fall, while consumers incomes increase, and AS > AD.15. Expensive houses in Austin ‘Tech workers (buyers) move to Austin 16, Fast food burgers, Burger firms offer free soft drinks with each burger. bought, 17. Spam (pork paris Consumer incomes. decrease ina can), (assume that Spam is considered a8 inferior).18, 19. 20 Gold (precious metals) SUY tires Brand name prescription drugs Producers and consumers expect lower prices. Government recalls these because they are unsafe, Generic drug (competitors) prices decrease.21 Cotton Suppiy increases, while Demand decreases Cost of fertilizer goes down.Practise Quiz Spring 2010 Chapter 3 1L1f Max’ demand for hot dogs fll as his income rise, then for Max ot dogs te ‘4 abad god. 1. an inferior good a preferential good 4. nomal good. ‘© tneutal goo: 2.As he price of good X rises, the demand for good Y falls. Therefore, goods X and Y are ‘substi, b. normal goods. © complements, 4. inferior goods. none ofthe above 3The law of supply states that price and quantity supplied are ‘inversely related, ceteris paribus 1. iret related, ceteris paribus. & notrelated a. fixed ‘4. te workers ofa firm successfully negotiate an increase in wages which ofthe following i most likely to happen’ 1 The demand cuve forthe product the firm produces shifts rightward b, The demand curve for the produc the firm produces shifts letward 2 The supply euve of the prove the frm produces shifts rightward. A. The supply curve ofthe product the firm produces shifts leftward, 5.0 producers expect that ol prices noxt year will be Jower than cil prices this year. As a esl, ol producers sre moet likely to {place more ol on the market this year, thus siting the present supply curve of oi rightward bold some ol of the market this yea, thus lefoward, place more ol on the market this yar, thus increasing the quantity supplied of ol at lower but not higher prices. 44 old some ol ff the marker this yeu, thus decreasing the quantity supplied of ola ower butnot higher prices. ing the present supply euve of ol {6 Which of the following will na hit a supply curve? ‘change inthe price of relevant resources ', change inthe goods own price ©, change inthe numberof sellers 4._achange in per-anit costs brought about by achange in taxes.“tthe supply curve and th demand curve fr letuce both shift to the let by an equal amount, what can we sy bout the resin changes in price and quantiy? ‘The price wll increase, but the quantity may increase or decrease, 1. “The pice wll incense, andthe quantity will increas, {© The price wll decrease, and th quantity wil increase. «4. The price wll stay the same, but the quantity wil increase, © The price wil tay the same, but the quantity wil decease 8.Ata price above the equilbium price there is ‘a ashorige b. asus excess demand. 4. superequiibrium. ‘enone of the above {94f demand decreases by rater amount than supply decreases, then equim pice and ‘eauibram quantity . sises falls als ies als fs 10.A rightward shift inthe demand curve for tennis alls cou be caused by ‘fallin the price of nis balls, a fall inthe price of tenis racks. ‘© arise inthe price of tennis lessons. 4. fal in income, assuming tems ball area nora good.