In-Class Project: Demand and Supply
In-Class Project: Demand and Supply
Directions:
For the following exogenous shocks (you will be assigned one question, which is the same number as your group number, from 1-3):
Draw the Demand-Supply diagram with correctly labeled axes and the name of the market at the top.
Assume end-user, “product” market. I.e., what is the good that you as a normal consumer buy in the retail market relevant to the shock you have been assigned. That retail, final good should inform how you label the axes, especially the relevant quantity units on the horizontal axis, and what you will write above the graph for the name of the market/good.
Show Equilibrium points A (before the shock) and B (after the shock)and estimate numerical coordinates on X and Y axes.
Categorize the shifter – choose the entry from the list of Demand or Supply shifters that most closely describes the shock. This is the only thing you need to write outside of the graph. If you are unsure of the shifter or are picking more than one shifter from the list, include an explanation of why the shifter you chose most closely categorizes the specific situation in your question.
1. Companies like Sony produce both laptops and stereos. When consumer buy fewer laptops as they shift instead to smartphones and tablets, show how the stereo market is impacted.
2. Rare earth metals are vital to produce cell phones. Show how the cell phone market is impacted when China shuts off exports of rare earth metals due to a dispute with Japan.
3. Show how the September 11th attack impact the market for security equipment.
4. A tsunami in Japan sharply reduces the flow of auto parts to car factories all over the world. Don’t forget – the market is the good that you as a normal consumer buy in the retail market
5. Hurricane Katrina greatly impacted tourism in New Orleans even though the tourist section of the city (“The French Quarter”) was essentially unharmed.
6. BP Gulf oil spill cost the fishing industry hundreds of millions of dollars in lost revenue.
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