Question

1. Select one good or service that your company produces and explain what have been the main drivers of the change (shift) in supply experienced during the last 3 years.

2.Select one good or service that your company produces and explain what have been the main drivers of the change (shift) in demand experienced during the last 3 years.

3. Identify one good or service that has experienced a substantial change in the quantity demanded (movement along the demand curve) during the last year and explain why.

4. Identify one good or service that has experienced a substantial change in the quantity supplied (movement along the supply curve) during the last year and explain why.

Answer 1

Company name: ABC Pvt. Ltd.

Good: Pet bottle

1.

Supply curve is a line segment of establishing relationship between quantity supply and price of each quantity. The law of supply is at higher price higher would be the quantity supply; therefore, the supply curve is upward slopped from left to right.

If input cost decreases, supplier can supply more at the same market price; it shifts the supply curve to the right. It happens in this case; the raw material of pet bottle is pet resin; the market price of resin decreased within the last 3 years, causing the shift of supply curve to the right direction.

3.

During the last year demand falls in few countries in Asia. It happens because of higher price structure to them. Exchange rates in those countries are very high, making the pet bottle costlier there. Higher exchange rate leads to increase price, which the consumers can’t afford. Most of the consumers of those countries can’t able to import goods at such high price; makes the demand fall.