Question

1. SUPPLY & DEMAND ANALYSIS

For each of the scenarios below, provide a completely (correctly) labeled market model showing the impact on equilibrium price and quantity (if any). Make sure to report your results.

1. HOCKEY STICKS: After watch the NHL hockey game, many young fans decide to take up the game of hockey.
2. BASKETBALLS: Hockey & basketball are often played in the same season. If many youth decide to take up hockey instead, what happens in the basketball market?
3. DONUTS: Specialty donut makers like Voodoo donuts decide to raise their prices.
4. BAGELS: What happens in the bagel market as a result of donut prices increasing?
5. DESIGNER PURSES: If designer purses are an inferior good, what happens to the market when we experience a recession (decrease in income)?
6. HOTEL ROOMS: A brand new hotel opened up in Cheney.
7. PIZZA: The local pizzeria employs a lot of minimum wage workers What happens each January in response to the minimum wage increases in Washington State?
8. WHEAT: In response to the huge demand for hops, many farmers in Washington are converting their fields from wheat to hops. How does this impact the wheat market in Washington?

Answer 1

a) The demand for hockey sticks will increase, causing the equilibrium price and quantity of hockey sticks to increase.

b) The demand for basketball will fall. The equilibrium price and quantity for basketball will fall.

c) This is a movement along the demand curve for Voodoo donuts. The quantity demanded will fall.

d) Donuts and bagels are substitute goods. If the price of donuts increase, the demand for bagels will increase. The equilibrium price and quantity will increase.

e) Inferior goods are those goods whose demand will increase if income falls and whose demand will fall if income increases. The demand curve for designer purses will increase, the equilibrium price and quantity will increase.

f) Supply of hotels rooms will increase. The supply curve will shift outward ( to the right). The equilibrium price will fall and quantity will increase.

f) The supply curve for pizza will decrease ( shift to the left). The equilibrium price will rise and quantity will fall.

h) The supply of wheat will fall, the price of wheat will increase and quantity will fall.