Demand, Supply, Price Practice
1.
Price of Rubber Increases Dramatically
P
S2
What is affected? (quantity, demand or supply)
Supply of goods made with rubber goes down
S1
Market Equilibirum:
E.P: 
E.Q: 
D
Q
Shifter: cost of inputs (production)
1.
Movie Increases Popularity of Baseball Hats
P
S
What is affected? (quantity, demand or supply)
Demand goes up
Market Equilibirum:
E.P: 
E.Q: 
D2
D1
Q
Shifter: consumer tastes and preferences
2. Price of Running Shoes Drops Drastically
What is affected? (quantity, demand or supply)
Quantity is affected
P
S
Market Equilibirum: a shortage is created
E.P:
E.Q:
●
D
Shifter: no shifter – it is the laws of supply and demand
3. Two New Blue Jeans Companies Enter the Marketplace
What is affected? (quantity, demand or supply)
Supply goes up
Q
P
S1
S2
Market Equilibirum:
E.P: 
E.Q: 
D
Q
Shifter: # of producers in the market place
4.
Consumers Worry the Price of Computers May
Increase Next Month
What is affected? (quantity, demand or supply)
Demand goes up
Market Equilibirum:
E.P: 
E.Q: 
●
P
S
D2
D1
Q
Shifter: consumer expectations
5.
Government Sets Price Ceiling Below Equilibrium Price
to Help Consumers Save Money
What is affected? (quantity, demand or supply)
Quantity is affected
P
S
●
Market Equilibirum: shortage is created
E.P:
E.Q:
●
D
Q
Shifter: no shifter it is laws of demand and supply
6. Insects Kill Half the World’s Tomato Crop
What is affected? (quantity, demand or supply)
Supply goes down
P
S2
S1
Market Equilibirum:
E.P: 
E.Q: 
D
Q
Shifter: Natural disaster
7.
Recession Hits – Many Consumers Lose Jobs (impact
on movie ticket sales)
What is affected? (quantity, demand or supply)
Demand goes down
P
S
Market Equilibirum:
E.P: 
E.Q: 
D2
D1
Q
Shifter: consumer income
8.
Price of Computer Chips Falls (impact on computer
market)
What is affected? (quantity, demand or supply)
Demand for computers OR
Supply of computers goes up
P
P
S
S1
S2
D2
Market Equilibirum:
E.P: 
E.Q: 
D1
D
Q
Shifter: Price of complementary good OR
Cost of input
9. Price of Salmon Skyrockets (impact on tuna market)
What is affected? (quantity, demand or supply)
Demand goes up
Market Equilibirum:
E.P: 
E.Q: 
Shifter: Price of substitute good
P
S
D2
D1
Q
Q
10. Government Places Sales Tax on Cigarettes to
Discourage Smoking (impact on cigarette market)
What is affected? (quantity, demand or supply)
Quantity is affected
P
S


Market Equilibirum: a surplus is created
E.P:
E.Q:
D
Q
Shifter: No shifter it is laws of supply and demand
11. Price of DVD Players Plummets (impact on DVD
market)
What is affected? (quantity, demand or supply)
Demand goes up
P
S
Market Equilibirum:
E.P: 
E.Q: 
D2
D1
Q
Shifter: Price of complementary good
12. New, More Efficient Assembly Line Technology
Introduced (automobile market)
What is affected? (quantity, demand or supply)
Supply goes up
P
S1
S2
Market Equilibirum:
E.P: 
E.Q: 
D
Q
Shifter: Technology
13. Government Sets Price Floor Above Equilibrium Price
to Help Farmers (impact on milk market)
What is affected? (quantity, demand or supply)
Quantity is affected
Market Equilibirum: a surplus is created
E.P:
E.Q:
Shifter: No shifter – it is the laws of supply and demand
P
S


D
Q