Markets: Demand & Supply Problems Dr. Dennis Foster

#1. In the market for oranges, what will happen if there is great weather in Florida and California? Supply Demand Price Quantity PePe QeQe

#1. In the market for oranges, what will happen if there is great weather in Florida and California? Supply Demand Price Quantity PePe QeQe New Supply New Price New Quantity Supply increases; price falls; output rises

#2. In the market for eggs, what will happen if they are found to raise cholesterol levels and raise the risk of heart problems? Supply Demand Price Quantity PePe QeQe

#2. In the market for eggs, what will happen if they are found to raise cholesterol levels and raise the risk of heart problems? Supply Demand Price Quantity PePe QeQe New Demand New Price New Quantity Demand decreases; price falls; output falls

#3. In the market for fine dining, what will happen if incomes across the population rise? Supply Demand Price Quantity PePe QeQe

#3. In the market for fine dining, what will happen if incomes across the population rise? Supply Demand Price Quantity PePe QeQe New Demand New Price New Quantity Demand increases; price rises; output rises

#4. In the market for Hawaiian vacations, what will happen if tourists are killed in Miami and hotel workers (in HI) get higher wages? Supply Demand Price Quantity PePe QeQe

#4. In the market for Hawaiian vacations, what will happen if tourists are killed in Miami and hotel workers (in HI) get higher wages? Demand increases & Supply decreases; price rises; output ??? Supply Demand Price Quantity PePe QeQe New Supply ??? New Price New Q ?? New Demand ??? New Q ??

#5. In the market for cookbooks, what will happen if scientists find a promising cure for AIDS? Supply Demand Price Quantity PePe QeQe

#5. In the market for cookbooks, what will happen if scientists find a promising cure for AIDS? Supply Demand Price Quantity PePe QeQe Probably no effect on supply and demand.

#6. In the market for beef, what will happen if the price of pork rises and the government restricts the import of beef? Supply Demand Price Quantity PePe QeQe

#6. In the market for beef, what will happen if the price of pork rises and the government restricts the import of beef? Supply Demand Price Quantity PePe QeQe New Supply ??? New Price New Q ?? New Demand ??? New Q ?? Demand increases & Supply decreases; price rises; output ???

#7. In the market for apartments, what will happen if NAU’s enrollment increases 25%? Supply Demand Price Quantity PePe QeQe

#7. In the market for apartments, what will happen if NAU’s enrollment increases 25%? Supply Demand Price Quantity PePe QeQe New Demand New Price New Quantity Demand increases; price rises; output rises

#8. In #7 (market for apartments), what will happen if NAU students successfully lobby the city council to establish a “rent ceiling” at P e ? Supply Demand Price Quantity PePe QeQe New Demand New Price New Quantity

#8. In #7 (market for apartments), what will happen if NAU students successfully lobby the city council to establish a “rent ceiling” at P e ? Supply Old Demand Price Quantity Fixed Price Available Quantity New Demand Off Mkt Price Desired Quantity

What is the “problem” in this market? How can tenants “pay” more in this market? There is shortage of apartments... at the controlled price! There are fewer apartments available than would be true if the rents were not controlled. Losers – landlords, students that can’t find apartments, students that can find apartments but must “pay” higher costs. Winners – the whiners. Under the table payments. Sub-leasing. Special deposits (perhaps non-refundable). Reduced quality. “Unfair” discrimination. Parking, and other, fees.

#9. In the market for new cars, what will happen if gas prices jump by 25% and auto workers go on strike? Supply Demand Price Quantity PePe QeQe

#9. In the market for new cars, what will happen if gas prices jump by 25% and auto workers go on strike? Supply Demand Price Quantity PePe QeQe New Supply ??? New Price ?? New Demand ??? New Q Demand decreases & Supply decreases; output falls; price ??? New Price ??

#10. In the market for PCs, what will happen if workers see that the future will require that they have computer skills and Intel invents a new, bigger, faster, cheaper computer chip? Supply Demand Price Quantity PePe QeQe

#10. In the market for PCs, what will happen if workers see that the future will require that they have computer skills and Intel invents a new, bigger, faster, cheaper computer chip? Supply Demand Price Quantity PePe QeQe New Supply ???New Price ?? New Q New Demand ??? Demand increases & Supply increases; output rises; price ??? New Price ??

#11. In the market for peanuts, what will happen if the government establishes licensing as a mechanism for raising peanut farmer incomes? Supply Demand Price Quantity PePe QeQe

#11. In the market for peanuts, what will happen if the government establishes licensing as a mechanism for raising peanut farmer incomes? Supply Demand Price Quantity PePe QeQe New Supply New Price New Q Supply decreases; output falls; price rises

#12. In the market for the Xbox, what will happen if the price of Sony Playstations fall as does the price of games that are played on the Xbox? Supply Demand Price Quantity PePe QeQe

#12. In the market for the Xbox, what will happen if the price of Sony Playstations fall as does the price of games that are played on the Xbox? Supply Demand Price Quantity PePe QeQe New Price ?? New Q ?? New Demand ??? Demand increases & decreases; output ???; price ??? New Price ?? New Demand ??? New Q ??

Markets: Demand & Supply Problems Dr. Dennis Foster