Principles of Economics
1. For each of the following specified markets, sketch a graph of the initial market demand (D0) and supply (S0) curves and indicate the initial equilibrium price (P0) and equilibrium quantity (Q0).
Situation Specified Market
1. People’s income increases Market for brand new cars
2. People’s income decreases Market for goods sold in secondhand shops
3. Minimum wage increases Market for fast food
4. Prices of bicycles are set below P0 Market for bicycles
5. Winter clothing to go on sale next month Market for winter clothing
6. Increase in urban residents Market for apartment in urban areas
7. Price of movie tickets decreases Popcorn at movie theater
8. New technology allows corn seeds to resist pests and droughts Market for corn
9. Increase in number of coffee shops in downtown Madison Market for coffee
10. Price of cereal increases Market for milk
11.College tuition increases College enrollment
12. Winter storm Juno damages the infrastructure of skiing resorts Market for skiing resorts
13. Price of shrimp is set above P0 Market for shrimp
14.Flu season begins Market for flu vaccines
15. Cost of building material, such as cement, increases Market for houses
Describe how each of the situations listed in the table below will affect the initial demand and supply curve by drawing a sketch of the shift (if there is any) or a movement along the curve. Label in your graph the new equilibrium price (P1) and new equilibrium quantity (Q1).
