12
Demand and Supply
In each of the following scenarios decide if the product is moving along the curve ( The price of diamonds has gone from $ 1,000 a karat to $ 2,000 a karat, this represents movement along the curve. Higher the price less of the demand.) OR If the product’s determinants have shifted the curve. (flat screen TVs have become more popular (notice no mention of price). The demand curve has shifted to the right.)
1.What are the determinants of demand? (Just list them)
2.What effect will each of the following have on demand for small automobiles such as the Mini-Cooper and Smart Car?
A. Small automobiles become more fashionable.
B. The price of large automobiles rises (with the price of small autos remaining the same.)
C. Income declines and smalll autos are an inferior good.
D. Consumers anticipate that the price of small autos will greatly come down in the near future?
E. The price of gasoline substantially drops.
