Question

1)

7. Movements along versus shifts of supply curves

Consider the market supply of peanut butter.

Complete the following table by indicating whether an event will cause a movement along the supply curve for peanut butter or a shift of the supply curve for peanut butter, holding all else constant.

Event	Movement Along	Shift
A change in expectations about the future price of peanut butter
A decrease in the price of peanut butter
A change in technology that makes it less costly to produce peanut butter

2)

9. Shifts in supply or demand HI

The following graph shows the market for cakes in Miami, where there are over 1,000 bakeries at any given moment. Suppose the price of flour, a major ingredient in cakes, suddenly increases.

Show the effect of this change on the market for cakes by shifting one or both of the curves on the following graph, holding au else constant.

3)

10. Market equilibrium

The following table shows the annual demand and supply in the market for shoes in Philadelphia.

Price (Dollars per pair of shoes)	Quantity Demanded (Pairs of shoes)	Quantity Supplied (Pairs of shoes)
20	1,100	200
40	900	400
60	800	500
80	600	900
100	500	1,200

On the following graph, plot the demand for shoes using the blue point (circle symborf). Next, plot the supply of shoes using the orange paint (square symbol). Finally, use the black point (cross symbol) to indicate the equilibrium price and quantity in the market for shoes.

Answer 1

A change in the expectation about the future price of peanut button will shift the supply curve, as the demand will also increased/decreased. A decrease in the price of peanut butter lead to decrease in the quantity supplied of peanut butter so, there will be movement along the curve. A change in the technology that makes it has costly to produce peanut butter will shift the supply curve as it will affect the supply of peanut butter.