5. D1 D1 D1 D1 D2 D2 D2 D2 P QD 1 QD 2

6. D1 D1 D1 D1 D2 D2 D2 D2 P QD 1 QD 2 More income results in more demand for new cars; less demand for used cars. New Cars Used Cars Less income results in more demand for used cars; less demand for new cars.

7. D1 D1 D1 D1 D2 D2 D2 D2 P QD 1 QD 2 More demand for both new and used cars New Cars Used Cars 1 billion This is what we told 1 billion Chinesenew potential Chinese, as new potential consumers consumers, when we opened trade relations trade relations with them in the 70s.

8. D1 D1 D1 D1 D2 D2 D2 D2 P QD 1 QD 2 iRate I f Steve Jobs responds to iRate customers who iPhone iSorry bought the iPhone at $599 and says, “iSorry, we will raise the price back to $599 in 3 weeks.” iPhone $399 Buy it now to save money.

9. D1 D1 D1 D1 D2 D2 D2 D2 P QD 1 QD 2 major shortage of toilet tissue If there is expected to be a major shortage of toilet tissue, then consumers will stock up now or risk not getting any.

10. D1 D1 D1 D1 D2 D2 D2 D2 P QD 1 QD 2 coming out of recession Let’s say that we are coming out of recession & consumers Positive future income feel secure about their jobs. [ Positive future income ]

11. D1 D1 D1 D1 D2D2D2D2 P QD 1 QD 2 going into a recession Let’s say that we are going into a recession and consumers Negative future income don’t feel secure about their jobs. [ Negative future income]

12. Complement [ Inverse ] Substitute [ Direct ] Milk Cereal Pop Tarts D1D1D1D1 D2D2D2D2 P P1P1P1P1 QD 1 P2P2 D1D1D1D1 D2D2D2D2 D P QD 2

14. 1. Resource Cost [wages & raw materials ] [Inverse] Wages Raw Materials S If resource cost decreases supply Increases [making more $] If resource cost increases supply Decreases [making less $] S S P

15. P1 QS1 Broccoli “Substitutes in production” I only have 200 acres S Corn S1S1S1S1 P S2S2S2S2 QS1 QS1 S1S1S1S1 P S2S2S2S2 S Corn Producers want to produce more of the good where price is increasing, or at least, where the price is not going down. Broccoli P2 QS2 QS2

16. S Because cows produce more milk, farmers don’t have to have as many cows. [ saves $ ] S P We love these cow waterbeds because we get better blood flow and can produce 30% more milk. Supply curve “udderly” moves “udderly” to the right. Less skin abrasions so happier cows produce more milk. Mooooove over and give me that waterbed. Waterbedsforcows.com

17. NFL S1S1P Q $50 $50 Supply of FB games increased when the XFL was formed. S3S3S3S3 QSQS XFL in 2001 XFL in 2001 Because of the XFL’s cheerleaders many called this league, not the XFL, but the Supply of FB games each week XXXFL XFL [Extreme Football League] 8 new teams

18. expectfuture oilprices to decline If oil p roducers expect future oil prices to decline, they will (increase/decrease) current production. S1S1S1S1 Oil Prices expected to decrease [“INVERSE”] P S2S2S2S2 expect future oil prices to increase If oil p roducers expect future oil prices to increase, they will (increase/decrease) current production. S2S2S2S2 Oil Prices expected to increase

19. S3S3S3S3 [Direct] P subsidies Free money from the government (subsidies) induces suppliers to supply more. S1S1S1S1 S2S2S2S2 If subsidies are taken away, then suppliers are losing money and will decrease supply.

20. S3S3S3S3 [Inverse] P taxes decreased If business have their taxes decreased, it moves the supply curve to the right. S1S1S1S1 S2S2S2S2 taxes increased If business have their taxes increased, it moves the supply curve to the left.