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Problem #2. Presented by Karina Aleksandrova. Problem #2. Use knowledge of demand to answer six questions Use demand and supply curves for illustration. supply. price. demand. quantity. Effect on the demand for oranges. Supply curve shifts Price rises for the same quantity
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Problem #2 Presented by Karina Aleksandrova
Problem #2 • Use knowledge of demand to answer six questions • Use demand and supply curves for illustration supply price demand quantity
Effect on the demand for oranges Supply curve shifts Price rises for the same quantity Quantity for the price decreases Demand curve unaffected Less quantity demanded with higher prices Change along the curve 2. a) Freeze in Florida supply price demand quantity
Effect on the demand for coffee More quantity demanded at the new lower price 2. b) Price of coffee falls P1 P2 Q1 Q2
Effect on demand for beans Inferior good Demand increases as income falls 2. c) Income falls price quantity
Effect on demand for jelly Complement goods Decrease in price of peanut butter causes increase of demand for jelly 2. d) Fall in the price of peanut butter price quantity
Effect on demand for apples Demand decreases Consumer preference is changed Less quantity demanded at the same price 2. e) Red apples cause cancer price quantity
Effect on demand and supply of lumber Demand increases More lumber needed to rebuild More consumers Supply may decrease if suppliers were affected More costly to produce lumber 2. f) East coast hurricane price quantity
Factors that affect demand • Price of the good • a) Freeze in Florida, b) Decrease in price of coffee • Consumers’ income • c) Income falls • Prices of related goods • d) Fall in the price of peanut butter • Consumers’ preferences • e) Red apples cause cancer • Number of consumers • f) East coast hurricane
