For each of the following situations, answer these questions:
A. Which force is involved (Supply or Demand) AND did it Increase or Decrease?
B. Which specific impact is involved?
C. How would the Price and Quantity sold be effected?
American consumers buy most goods in packages. Recently, the cost of plastics has been reduced with the cost of oil. What impact would exist upon the market for paper packaging materials? A. S or D_____B.______ C. Price______ Quantity_____
John F. Long develops a new and better method of building quality homes. Other builders again copy his methods. What impact would exist on the new home market? A. S or D_____B.______ C. Price______ Quantity_____
Copper deposits around the world have diminished. What impact will this have on the copper market?
A. S or D_____B.______ C. Price______ Quantity_____
Aging Americans become convinced that age is a state of mind and, therefore, began to dress like younger people. What impact would exist upon the younger styles of clothing?
A. S or D_____B.______ C. Price______ Quantity_____
For each of the given situations, let's analyze the impact on the market using the following questions:
Situation 1: The cost of plastics, used in packaging, has reduced along with the cost of oil.
A. Which force is involved (Supply or Demand) AND did it increase or decrease?
In this scenario, the decrease in the cost of plastics implies a decrease in production costs for packaging materials. Therefore, it would affect the supply force.
B. Which specific impact is involved?
The specific impact involved is a decrease in production costs for packaging materials.
C. How would the Price and Quantity sold be affected?
As the production costs decrease, the suppliers can offer packaging materials at a lower price. This decrease in price increases the demand for paper packaging materials, leading to an increase in both the price and quantity sold.
Therefore:
A. S or D: Supply decreased.
B. Impact: Decrease in production costs for packaging materials.
C. Price: Decrease.
C. Quantity: Increase.
Situation 2: John F. Long develops a new and better method of building quality homes, which other builders begin to copy.
A. Which force is involved (Supply or Demand) AND did it increase or decrease?
When other builders start copying Long's methods, it increases the supply of quality homes in the market. Therefore, it affects the supply force.
B. Which specific impact is involved?
The specific impact involved is an increase in the supply of quality homes.
C. How would the Price and Quantity sold be affected?
With more builders implementing Long's methods, the supply of quality homes increases. This increase in supply leads to a higher competition, thus decreasing the price of quality homes. The quantity sold would increase due to the greater availability of quality homes.
Therefore:
A. S or D: Supply increased.
B. Impact: Increase in the supply of quality homes.
C. Price: Decrease.
C. Quantity: Increase.
Situation 3: Copper deposits around the world have diminished.
A. Which force is involved (Supply or Demand) AND did it increase or decrease?
The diminishing copper deposits affect the supply of copper in the market. Therefore, it affects the supply force.
B. Which specific impact is involved?
The specific impact involved is a decrease in the supply of copper.
C. How would the Price and Quantity sold be affected?
With the decrease in copper supply, the demand for copper remains the same or potentially rises. This leads to an increase in the price of copper. The quantity sold would decrease due to the limited availability of copper.
Therefore:
A. S or D: Supply decreased.
B. Impact: Decrease in the supply of copper.
C. Price: Increase.
C. Quantity: Decrease.
Situation 4: Aging Americans become convinced that age is a state of mind and begin to dress like younger people.
A. Which force is involved (Supply or Demand) AND did it increase or decrease?
As aging Americans start dressing like younger people, it increases the demand for younger styles of clothing in the market. Therefore, it affects the demand force.
B. Which specific impact is involved?
The specific impact involved is an increase in the demand for younger styles of clothing.
C. How would the Price and Quantity sold be affected?
With the increase in demand for younger styles of clothing, the prices of such clothing would likely increase due to higher demand. The quantity sold would also increase as more aging Americans are buying these clothing styles.
Therefore:
A. S or D: Demand increased.
B. Impact: Increase in demand for younger styles of clothing.
C. Price: Increase.
C. Quantity: Increase.