Markets: Demand & Supply Problems Dr. Dennis Foster.

Markets:Markets:Demand & SupplyDemand & Supply

ProblemsProblems

Dr. Dennis FosterDr. Dennis Foster

#1. In the market for oranges, what #1. In the market for oranges, what will happen if there is great weather will happen if there is great weather in Florida and California?in Florida and California?

Supply

Demand

Price

Quantity

Pe

Qe

#1. In the market for oranges, what #1. In the market for oranges, what will happen if there is great weather will happen if there is great weather in Florida and California?in Florida and California?

Supply

Demand

Price

Quantity

Pe

Qe

New Supply

New Price

NewQuantit

y

Supply increases;price falls; output

rises

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

Supply

Demand

Price

Quantity

Pe

Qe

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

Supply

Demand

Price

Quantity

Pe

Qe

New Demand

New Price

NewQuantit

y

Demand decreases;price falls; output falls

#3. In the market for fine dining, what will happen #3. In the market for fine dining, what will happen if incomes across the population rise?if incomes across the population rise?

Supply

Demand

Price

Quantity

Pe

Qe

#3. In the market for fine dining, what will #3. In the market for fine dining, what will happen if incomes across the population rise?happen if incomes across the population rise?

Supply

Demand

Price

Quantity

Pe

Qe

New Demand

New Price

NewQuantit

y

Demand increases;price rises; output

rises

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

Supply

Demand

Price

Quantity

Pe

Qe

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

Demand increases & Supply decreases;

price rises; output ???

Supply

Demand

Price

Quantity

Pe

Qe

NewSupply ???

New Price

NewQ ??

NewDemand ??

?

NewQ ??

#5. In the market for cookbooks, what will #5. In the market for cookbooks, what will happen if scientists find a promising cure happen if scientists find a promising cure for AIDS?for AIDS?

Supply

Demand

Price

Quantity

Pe

Qe

#5. In the market for cookbooks, what will #5. In the market for cookbooks, what will happen if scientists find a promising cure happen if scientists find a promising cure for AIDS?for AIDS?

Supply

Demand

Price

Quantity

Pe

Qe

Probably no effect on supply and demand.

#6. In the market for beef, what will happen #6. In the market for beef, what will happen if the price of pork rises and the if the price of pork rises and the government restricts the import of beef?government restricts the import of beef?

Supply

Demand

Price

Quantity

Pe

Qe

#6. In the market for beef, what will happen #6. In the market for beef, what will happen if the price of pork rises and the if the price of pork rises and the government restricts the import of beef?government restricts the import of beef?

Supply

Demand

Price

Quantity

Pe

Qe

NewSupply ???

New Price

NewQ ??

NewDemand ??

?

NewQ ??

Demand increases & Supply decreases;

price rises; output ???

#7. In the market for apartments, what will #7. In the market for apartments, what will happen if NAU’s enrollment increases 25%?happen if NAU’s enrollment increases 25%?

Supply

Demand

Price

Quantity

Pe

Qe

#7. In the market for apartments, what will #7. In the market for apartments, what will happen if NAU’s enrollment increases 25%?happen if NAU’s enrollment increases 25%?

Supply

Demand

Price

Quantity

Pe

Qe

New Demand

New Price

NewQuantit

y

Demand increases;price rises; output

rises

#8. In #7 (market for apartments), what will #8. In #7 (market for apartments), what will happen if NAU students successfully lobby the happen if NAU students successfully lobby the city council to establish a “rent ceiling” at Pcity council to establish a “rent ceiling” at Pee??

Supply

Demand

Price

Quantity

Pe

Qe

New Demand

New Price

NewQuantit

y

#8. In #7 (market for apartments), what will #8. In #7 (market for apartments), what will happen if NAU students successfully lobby the happen if NAU students successfully lobby the city council to establish a “rent ceiling” at Pcity council to establish a “rent ceiling” at Pee??

Supply

Old Demand

Price

Quantity

Fixed Price

Available

Quantity

New Demand

Off Mkt Price

DesiredQuantit

y

What is the “problem” in this market?What is the “problem” in this market?

How can tenants “pay” more 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 #9. In the market for new cars, what will happen if gas prices jump by 25% and happen if gas prices jump by 25% and auto workers go on strike?auto workers go on strike?

Supply

Demand

Price

Quantity

Pe

Qe

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

Supply

Demand

Price

Quantity

Pe

Qe

NewSupply ???

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

Supply

Demand

Price

Quantity

Pe

Qe

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

Supply

Demand

Price

Quantity

Pe

Qe

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

Supply

Demand

Price

Quantity

Pe

Qe

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

Supply

Demand

Price

Quantity

Pe

Qe

NewSupply

New Price

New Q

Supply decreases;output falls; price

rises

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

Supply

Demand

Price

Quantity

Pe

Qe

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

Supply

Demand

Price

Quantity

Pe

Qe

New Price ??

New Q ??

New Demand ???

Demand increases & decreases;

output ???; price ???

New Price ??

New Demand ???

New Q ??

Markets:Markets:Demand & SupplyDemand & Supply

ProblemsProblems

Dr. Dennis FosterDr. Dennis Foster