ECONoMIC SKILLS`LAS AnafyZihg Changes ill Qe/`nahd

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Chapter 3
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ECONoMIC SKILLS'LAS
AnafyZihg Changes ill Qe/'nahd
.
.
;
I'
t.,
of
. The quantity
a product' dernimded'depeQds on its price and on the prices of substituteand complementary
.,p~oducts~ SOrnetirties' conditions change, and the demand fora 'productshifts so that different quantities are
'dernandedateach
andevery price..
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Changes ih tile following variables can lead toa shift in demand: .
.
'a.;'ID,coine .... .
d.theprice of complements
b. the price ofsubstitutes:
'. e.tastesand preferences
.'.c. the number of buyersf.
'expectations
\
.' After the "events" described in column 1, what will happen-to the demand for the products listed in column.Z? In
the ,space provided iri column 3, show how the demand curve shifts. Write. the letter in column 4 of
variable
that responsible for thechange.
.
.
th~
is
Z. Product
1. Event
The price of steak
increases.'
.
.
.
."
3. Demand Shift .
t~·,
-
Hamburger
.
. .Low-fatdiets.grow
.
. Fresh gra~s
4. Variable
b. The price of substitutes
in. popularity,
Di~~eyWo~ld increases
admission.prices.
.
The price ofeggs falls.'
'.
lHotd'rooms
neai .
Disney World
(Bacon'
,'I'
Ii
Ahard freeze destroys . Or~gy juice ~.
much of
the future.
orange crop. .
The-price of gasoline.
increases.dramatically,
'<'.
Motorcycles
.
People's incomes drop. . Chicken.
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Class
Name
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ACTIVITY'
8
Date
Free Enterprise
,
,~.
SUPPLY AND DEMAND
\
There qre various nonprice factors that cause shifts in the supply and demand curves, not just
movement along the same curves. The chart below indicates several situations that will have an
effect on the' supply ~nd demand curves for cable television. Read each situation and answer the
following questions for each one in the charlo The first situation has been completed as an .
example.
.'
1.
2.
3.
4.
Which nonprice factor causes the shift in the curve?
Would the ~hift be in the supply or demand curve?
Would there be an increase or decrease in quantity at each price?
in which direction on ~ graph would the shift go?
1; A very convincing ad warns
parents about the dangers of .
children's watching too much
television.
2. After a two-month strike,
cable installers receive a
$1 /hour raise.
3. A new cable company opens.
"
4. The cost of renting VCR
movies goes down.
5. New technology makes
installing cable less expensive.
-"
..
6. A large factory nearby lays off
2,000 workers.
7. Cable TV begltis a very
popular children's program.
8. A cable TV transmitter
is
severely damaged bya storm
and has to be replaced.
a
Nonprice.
Factor
Supply or
Demand
Increase or
Decrease
Direction of
.Shift .
.tastes and
preferences
demand
curve .
decrease
left
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