DEMAND and SUPPLY FUNDAMENTALS: Shifts in Demand or Supply
Variables typically included in a multivariate demand function (other than the price and quantity of the item the demand function represents) are consumer tastes and preferences, the number of buyers, spendable (disposable) income, prices of substitute goods, prices of complementary goods, advertising expenditures, weather, and expectations. Recalling that the price of the item being considered is placed on the vertical axis, and the quantity on the horizontal axis, the other variables are termed demand shifters. Please answer the following questions about the affect changes in other variables might have on the demand for the item. These changes will either cause demand to increase(shift right) or decrease(shift left). Use either word as applicable, for the short answer.
If the price of a good increases because the demand for it increases, What would you expect the demand for its complement to do?
If the demand for coffee beans increases, then what is likely to happen to the demand for land on which to grow coffee?
If advertising expenditures for the good being considered are decreased, then demand for the good being considered will likely:
Lattes are a relatively expensive coffee drink. However, being a normal good, as consumersรขยย disposable income increases, the demand for Lattes should:
5. As the supply of tablet computers and e-readers increases relative to the demand for them, what change in demand for printed textbooks (having digital e-book versions) would you expect?
Variables typically included in a multivariate supply function (other than the price and quantity of the item the supply function represents) are prices of other goods that use similar input resources for production, expectations, the number of suppliers, techniques of production, taxes and subsidies, and prices of input resources, weather. Please answer the following questions about the affect changes in other variables might have on thesupplyof the item. These changes will either cause supply to increase(shift right) or decrease(shift left). Use either word as applicable, for the short answer.
If there is an increase in the number of producers of the item being considered, then the supply of it is likely to:
A tariff is a form of trade restriction (that behaves much like a tax). Suppose the United States removes a high tariff on imported broccoli that had been in effect for a long time. How should this affect the supply of imported broccoli?
A decrease in a government-provided subsidy of the item being considered is likely to ___________its supply.
If the price of an input resource decreases (and there are no cheaper substitutes for the resource) then producers of the item are likely to _____________ its supply?
Suppose broccoli growers have successfully lobbied Congress for a crop subsidy. Once the subsidy becomes available, the domestic broccoli supply is likely to:
