Question

1. Draw a supply and demand curve for the Nike tennis shoe market.
   1. Label both axes and all curves
   2. Find and label equilibrium price and quantity (label  them p1 and q1)
   3. Draw an increase in demand (label the new curve d2)
   4. Find and label the new equilibrium price and quantity (label them p2 and q2)

Using the factors that shift demand, give an example of an event that could increase the demand curve for Nike tennis shoes.  

Answer 1

In following graph, price (p) and quantity (q) are depicted vertically and horizontally respectively. Initial equilibrium is at point 1 where initial demand curve d1 intersects initial supply curve s1 with price p1 and quantity q1.

If more people decide to start playing tennis, the demand for Nike tennis shoes will increase, shifting d1 rightward to d2, intersecting s1 at point 2 with higher price p2 and higher quantity q2.