Price Elasticity and Supply & Demand
Fill in the matrix below and describe how changes in price or quantity of the goods and services affect either supply or demand and the equilibrium price. Use the graphs from your book and the Tomlinson video tutorials as a tool to help you answer questions about the changes in price and quantity
Event Market affected by event Shift in supply, demand, or both. Explain your answer. Change in equilibrium
Frozen orange crops in California Orange ...view middle of the document...
Hurricanes in the Gulf Coast
Oil and seafood Supply (left)—Not as much oil or seafood available to offer consumers. Price will increase and quantity will decrease.
Cost of cotton decreases
Clothing Supply (right) – More clothing available to offer consumers. Price will decrease and quantity will increase.
Technology improves efficiency in pasta manufacturing
Pasta or pasta related products (supermarket foods, restaurant foods) Supply (right) – More pasta or pasta related products available to offer consumers. Price will decrease and quantity will increase.
1. What do substitutes refer to in economics? Give an example of two substitutes.
A substitute refers to an alternate good that consumers are able to purchase when the original good had a price increase. Examples of substitutes are when consumers buy margarine when the price of butter increases or buy miracle whip when the price of mayonnaise increases, or pork when the price of beef increases.
2. Define “Price Elasticity of Demand.” Give an example.
The term price elasticity of demand is a measure of how much of the quantity demanded of a product responds to a change in the price of that product. For instance, a family determines that they will start eliminating luxury items or replacing them with substitutes because of the economy, and their budget, and...