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?