Question

1. For each of the following scenarios, determine if there is an increase/decrease in supply or quantity supply for the goods in Italics. Draw a supply and demand curve to examine the changes in equilibrium, if any.

a.) Growers of tomatoes experience an unusually good growing season

b.) The price of movie tickets, a substitute for Netflix movie rentals, goes up

c.) The cost of producing tires increases

d.) Kendrick Lamar, who is crazy about air travel, gets fired from his job

e.) Price of oranges increases

Answer 1

Answer (a):

From the above diagram we can see that the demand for Tomatoes is measures along the X axis and the supply of Oranges is measured along the Y axis. The curve D is the Original demand curve of Tomatoes and the S curve is the original Supply curve of the Tomatoes. If the growers of tomatoes experience a very good growing season, this will increase the supply of tomatoes (shown by the curve S1). The increase in the supply of tomatoes will bring down the desire of the people to have more and more tomatoes, and thereby bring down the demand of tomatoes (Shown by the curve D1).

Answer (b):

From the above diagram we can see that the demand for Netflix is measures along the X axis and the Price of movie tickets is measured along the Y axis. The curve D is the Original demand curve of Netflix and the S curve is the original Supply curve of the movie tickets. If the price of movie tickets increases, people will search for a better alternative to watching movies in the theaters meaning decrease the demand for movie goers ((shown by the curve S1), which will increase the demnd for Netflix in the market (shown by the curve D1).

Answer (C):

From the above diagram we can see that the demand for Tries is measures along the X axis and the Cost of Tires is measured along the Y axis. The curve D1 is the Original demand curve of Tires and the C1 curve is the original Cost curve of the Tires. If the cost of producing tires increases, this will decrease the supply of tires (shown by the curve C). The decrease in the supply of tires will bring down the desire of the people to buy more tires, and thereby bring down the demand of tires (Shown by the curve D).

Answer (d):

From the above diagram we can see that the demand for Air travel is measures along the X axis and the availability of money supply is measured along the Y axis. The curve D is the Original demand curve of air travel and the M curve is the original supply of money supply. Due to being fired from Job, availability of money supply decreases, Kendrik Lamar will not have enough money to afford air travel meaning decrease the availability of money (shown by the curve M1), which will decrease the demand for demand for air travel (shown by the curve D1).

Answer (e):

From the above diagram we can see that the demand for Oranges is measures along the X axis and the Price of Oranges is measured along the Y axis. The curve D is the Original demand curve of Oranges and the S curve is the original Supply curve of the Oranges. If the price of oranges increases (shown by the curve O1). The increase in the price of oranges will bring down the desire of the people to have more and more oranges, and thereby bring down the demand of oranges (Shown by the curve D1).