Business Supply and Demand

Find an article or use an example from your own business experiences in which supply and/or demand changed. Do not choose the market for labor. The analysis for a labor market is different from a typical good or service.

Include each of the following in your initial post.

1. Explain which curve shifted and which shifter was affected. (If you think both curves shift, for simplicity, just choose one of the curve shifts to analyze.)

2. Discuss how equilibrium prices and quantities changed.

For your responses, help your classmates analyze their situation further or ask them questions about their scenario.

[Hint: Demand shifters are listed on pages 105-111 of your text. Supply shifters are covered on pages 116-119. I also go over the shifters in the Livescribe notes and the supplemental powerpoints that are provided in the Course Materials section.]

Using the demand curve shifters (PYNTE), explain whether each of the following will increase or decrease demand for cell phones. Tell whether the demand curve shifts to the right or to the left.

a. A decrease in the incomes of consumers of cell phones.

b. An increase in the price of apps for cell phones.

c. An increase in the number of consumers in the market for cell phones.

Using the supply curve shifters (SPEND) explain whether each of the following will increase or decrease the supply of cell phones. Tell whether the supply curve shifts to the right or to the left.

a. The market price of the glass used in cell phone screens increases.

b. The number of firm that make cell phones increases.

c. Cell phone manufacturers expect the market price of cell phones to increase next month.

Read the following article regarding Cap and Trade policies.

http://online.wsj.com/article/SB10001424052702304620304575165843688369042.html?mod=WSJ_hpp_sections_news

a. What is a good or service market that might be affected limiting pollution via the cap and trade policy as described in the article? Explain.

[For simplicity, do not choose “jobs” or employment. Choose a good or service that would have its supply or demand affected by the cap and trade policy.]

b. Which of the shifters that shift either supply or demand (SPEND or PYNTE) does a Cap and Trade policy affect in the market you chose in Part (a)? Which curve (supply or demand) would shift in response to the policy? Will it increase or decrease?

c. Draw a supply and demand graph. Start with an initial equilibrium like you see on Slide #25 in the Attend section. Shift the curve in the direction that you chose in the previous section. Find the new equilibrium. (You do not need to turn in your graph. It is for your own use.)

Did equilibrium price increase or decrease? Did equilibrium quantity increase or decrease?