Read the following newspaper headlines. In each case decide if the event will cause a change in the market supply of cars. If you think the supply will increase, write “increase”. If not, write “decrease”. If no change will occur then write “no change”.Support your answer with the reason why supply shifted (technology, number of firms, price of inputs, taxes)
1. AUTO WORKERS AGREE TO WAGE
AND BENEFIT CUTS
_______________REASON_________________
2. NEW ROBOT TECHNOLOGY
INCREASES EFFICENCY IN DETROIT
FACTORIES
__________________REASON__________________
3. NATIONWIDE AUTO STRIKE BEGAN
AT MIDNIGHT
__________________REASON_____________________
4. U.S. ALLOWS MORE FOREIGN CARS
(ELIMINATES QUOTAS) TO
BE SHIPPED INTO THE COUNTRY
__________________REASON_____________________
5. TAX CUTS IN STORE FOR BIG
AUTO MAKERS
__________________REASON_____________________
6. STEEL PRICES RISE 10%
__________________REASON_____________________
7. HEALTH INSURANCE COSTS RISE
AND THE AUTO MAKERS
ARE RESPONSIBLE FOR 50% OF
EMPLOYEE PREMIUMS
__________________REASON_____________________
8. LARGE AUTO PRODUCER GOES
BANKRUPT, CLOSES FACTORIES
__________________REASON_____________________
9. IRS RAISES TAXES ON AUTO
MAKERS
__________________REASON_____________________
10. ELECTRICITY PRICES DECREASE
40% THROUGHOUT THE U.S.
__________________REASON__________________________________
For each of the scenarios:
A. Sketch a rough supply curve for each scenario
below and graph the supply change with a dotted line.
B. Identify the reason for the supply change (i.e.
taxes, technology)
C. Identify if the change was an increase or a
decrease
1. Due to the great success of Mr. CASH’s “TEACHERS
MOBILE SUPPLY UNIT” many more competitors are trying
to copy the idea. Graph for teachers mobile supply units.
2. The “goo” material in lava lamps become very
expensive.
What happens to the supplier’s ability to supply?
Graph for Lava lamps
3. The state government reduces taxes at Big Mikes
Burger
Place an extra 10%. What happens to the supplier’s
ability to supply? Graph for Mikes
Burger Place
4. Due to the war in Indonesia, Indonesian Cinnamon
Producers have been fighting rather than harvesting
cinnamon causing the price to skyrocket. What happens to the supply curve of
cinnamon graham crackers that depend on Indonesian cinnamon?
5. An invention that increased the production of shoes
is flawed
thus companies must discontinue the use and go back
to the old method. What happens to the ability to supply? Graph for shoes.
6. Boeing was charged an unexpected additional $8
Billion in
taxes. What happens to Boeings ability to produce
planes?
7. What happens to the supply of computers when a
government
regulation is eased which allows many more companies
to enter the market and compete?
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Supply and Demand Worksheet: https://drive.google.com/file/d/0B_gpVfHfuRG2UGRCRExBelRJWGc/edit?usp=sharing
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