Reference no: EM134049026

Assignment:

Find an article in a recent newspaper, magazine or the internet illustrating a change in price or quantity in some market. Analyze the situation using economic reasoning.

1. Has there been an increase or decrease in demand? Factors that could shift the demand curve include changes in preferences, changes in income, changes in the price of substitutes or complements, or changes in the number of consumers in the market.

2. Has there been an increase or decrease in supply? Factors that could shift the supply curve include changes in costs of materials, wages, or other inputs; changes in technology; or changes in the number of firms in the market.

3. Draw a supply-and-demand graph to explain this change (if you can; if not, explain your graphs). Be sure to label your graph and clearly indicate which curve shifts.

Turn in a copy of the article (if you can) along with your explanation. Avoid advertisements as they contain little information. Be careful of commodity and financial markets unless you have a good understanding of the particular market. Markets for ordinary goods and services (e.g., gasoline and food) are most easily analyzed.

Most changes will only shift one curve-either supply or demand-not both. Remember that price changes will not cause either curve to shift. (But shifting either curve will change price.)

Equilibrium points are not fixed. They change when supply or demand changes. Prices will not necessarily return to previous levels nor will quantities.

For reference, don't forget to look at the four graphs in the Powerpoints showing the shifts in supply and demand.