Supply and demand practice! #1 You are a tailor. You’ve just learned that the fabric company you...
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Supply and demand practice!
Supply and demand practice! #1 You are a tailor. You’ve just learned that the fabric company you normally buy from is going out of business. Drat! That
#1 You are a tailor. Youve just learned that the fabric company
you normally buy from is going out of business. Drat! That was the
cheapest supplier out there! I will have to raise prices. I will
have to lower prices.
Slide 4
Well done for #1! You will have to raise prices. Continue
Slide 5
Sorry, thats not right for #1. You will have to raise prices
because your production costs have now increased. Continue
Slide 6
#2 You live near a small village in Connecticut. It gets pretty
cold in the winter there, and home heating oil (HHO) is the only
method you have for heating your home. For me, the price of HHO is
inelastic. For me, the price of HHO is elastic.
Slide 7
Well done for #2! Home heating oil is inelastic (youll pay for
it regardless of the price): Inelastic is Important. Continue
Slide 8
Sorry, thats not right for #2. Home heating oil is inelastic
(important!) Continue
Slide 9
#3 What does this curve mean? Decreased demand Increased
demand
Slide 10
Well done for #3! Right shift = increased demand Continue
Slide 11
Sorry, thats not right for #3. Right shift = increased demand
Continue
Slide 12
#4 If a seller has selected a price at P S (see the word
ceiling) they are creating a Surplus Shortage
Slide 13
Well done for #4! A price below E is a shortage (Q S