Economics

In: Business and Management

Submitted By storeynj
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Appendix B
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 juice | Supply (left)—Not as many available oranges to offer consumers. | Price will increase and quantity will decrease. | Hurricanes in the Gulf Coast | Seafood | Supply – not as much available to harvest – not as many places available to harvest, clean and distribute. | Price will increase as the quantity decreases. | Cost of cotton decreases | Apparel/clothing | Supply – shifts right. Less demand for cloths during recession. Production costs down. No need to grow cotton when purchasing is down. Can use land for more profitable crops. | Price decreases and quantity increases. | Technology improves efficiency in pasta manufacturing | Pasta | Both – reduce the amount of manual labor needed because of technology improvements | Prices decrease and quantity increases. | 1. What do substitutes refer to in economics? Give an example of two substitutes. A substitute good is a product that a consumer will buy more of when the good they normally purchase becomes less affordable. The example that comes to mind for me is margarine and butter. People will buy more margarine as the price of butter increases. If you have two goods, and one of those goods goes up in price then it increases the demand for the other good. Another example of a good that is substituted is either tea or coffee.
2. Define “Price Elasticity of Demand.” Give…...

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