Hey there -
Just some questions to get you thinking about S & D, and some links to more animated gif files.
1) Some people will pay a higher price for brand-name goods. For example, some people buy Rolls Royces and Rolex watches to impress others. Does knowingly paying higher prices for certain items just to be a “snob” violate the law of demand?
2) Predict what will be the direction of change for either supply or demand (and in what market) in the following situations:
a. Several new companies enter the home computer industry.
b. Consumers suddenly decide that large cars are unfashionable.
c. The US Surgeon General issues a report that tomatoes prevent colds.
d. Frost threatens to damage the coffee crop, and consumers expect the price to rise sharply in the future.
e. The price of tea falls. What is the effect on the coffee market?
f. The price of sugar rises. What is the effect on the coffee market?
g. Tobacco lobbyists convince Congress to remove the tax paid by sellers on each carton of cigarettes.
h. A new type of robot is invented that will pick peaches.
i. Nintendo anticipates that the future price of games will fall much lower than the current price.
3) When Exxon moved away from its location at the northeast corner of Wright and Green Streets, Shell, operating on the southwest corner of Wright and Green, promptly raised its prices. Is this coincidence? Explain.
4) Why are we relatively insensitive to price changes affecting low-priced goods such as bubble gum?
http://www.reffonomics.com/determinatesofsupply.html (determinants of supply)
http://www.reffonomics.com/supplydemandindifferent.html (shifting curves)
Have a nice weekend - sorry I freaked some of you out about the application questions - no worries, we'll talk about them next week. Enjoy your relatively homework-free (from me) weekend! :)
Ohh - almost forgot - if you feel I missed comments for the blog grading, zip me an email. I have a system now, and it's going to work great, but it was a little confusing setting it up, so I may have missed some people on accident. Remember - your comments should be meaningful and amazing! ha!