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Homework answers / question archive / Indicate whether each of the following statements describes an increase in demand, decrease in demand, change in quantity demanded, increase in supply, decrease in supply, or change in quantity supplied in the given market
Indicate whether each of the following statements describes an increase in demand, decrease in demand, change in quantity demanded, increase in supply, decrease in supply, or change in quantity supplied in the given market.
a. Store-brand soup prices are cut, reducing sales of Campbell's soup. Market: Campbell's soup.
b. Coffee bean prices hit an 18-month low following a bountiful harvest. Market: coffee beans.
c. A summer heat wave leads to higher prices for bottled water. Market: bottled water.
d. Holiday clothing discounts boost clothing sales. Market: clothing.
e. Apple introduces a tinier and more powerful iPod model. Market: older iPod models.
a. If a store brand decreases its price and induces a decrease in demand for Campbell's soup the demand curve for Campbell's shifts to the left. This decreases demand and decreases the equilibrium price of Campbell's soup. This also decreases the equilibrium quantity produced of Campbell's soup.
b. If the coffee industry had a really good harvest and the prices have decreased the supply of coffee beans shifts to the right. This is an increase in supply because of an increase in yield which decreases the cost of production. The equilibrium price of coffee beans decrease and the equilibrium quantity of coffee beans increase.
c. If the prices of bottled water increase because of a heat wave then this would be induced by an increase in demand. An increase in demand shifts the demand curve to the right. This increases the equilibrium price and increases the equilibrium quantity.
d. If holiday discounts are boosting clothing sales then this means that the cost of supplying the clothes must have either decrease or is being subsidized. This shifts the supply to the right, increasing the quantity of clothes purchased and decreasing the price.
e. For a newer iPod to hit the market the old iPod loses appeal. This causes a decrease in the demand for the old iPod because there is a newer product on the market and it has lost competitiveness. This shifts the demand curve to the left, decreasing price and decreasing quantity.