Download IMPACTS UPON DEMAND IN A COMPETITIVE MARKET

IMPACTS UPON DEMAND IN A COMPETITIVE MARKET
For this exercise you need to understand the impacts on demand for a good. You also must be able to
identify the resulting impact upon the market price and quantity sold of the good. After reading each item
answer the following:
On the line next to each item: Did demand increase or decrease?
A. Which demand impact is involved? (Consumer taste, consumer income, substitute good,
complimentary good, consumer confidence and population change)
B. How will the price for the good change?
C. How will the quantity of the good sold change?
Up 1. The birth rate in the U.S. has increased greatly over the last five years. What will happen to the
demand for diapers?
A. _____Population__________ B.________up__________ C._________up___________
Up 2. The Internal Revenue Service reported that the average income for Americans has increased by
13%. What will happen to the demand for luxury items?
A. ______income_____________ B.________up__________ C._________up___________
Down 3. Americans like to eat wheat pancakes with maple syrup. Maple trees have been dying of creepy
drip fungus. Wheat pancake factory owners are concerned.
A. ______Complimentary good__ B.______down__________ C._______down___________
Down 4. Personal income taxes increase. All manufacturers are wondering how this will affect the
demand for their goods.
A. ______income_____________ B.______down__________ C._______down___________
Down 5. The Ebola virus hits many Midwestern cities causing a great loss of life. What will happen to the
demand for all products?
A. ______population__________ B.______down__________ C._______down___________
Up 6. Recently, the sale of larger automobiles has been increasing. Gasoline station owners wonder about
changes in the market for their products.
A. ______Complimentary good__ B.________up__________ C._________up___________
Up 7. Fish and turkey are excellent sources of low fat protein for Americans. Recently, the fish catch has
been low. Turkey farmers wonder about the impact upon the price and quantity of their product.
A. ______Substitute good_______ B.________up__________ C._________up___________
Down 8. As unemployment has increased in America, employers only offer jobs at low wages. The
average income of Americans decreased by 17%. Producers of all kinds worry about the price and
quantity of their products sold.
A. _____income______________ B.______down__________ C._______down___________
Down 9. Young American males start to imitate popular performers and start wearing dresses rather than
pants. Levi Strauss and other manufacturer of pants wonder about the impact this change will have on their
products.
A. _____taste________________ B.______down__________ C._______down___________
Down 10. American culture indoctrinates young people into consuming cookies and milk together. An
udder virus in cows causes a decrease in the availability of milk. Cookie manufacturers wonder about the
impact of this event on their product.
A. ______complimentary good__ B.______down__________ C._______down___________
Up 11. An oil embargo has been imposed upon America by Iran and Saudi Arabia. Plastic pipe is
manufactured from oil. Copper pipe manufacturers wonder about the impact upon their product.
A. _____substitute good________ B.________up__________ C._________up___________
Down 12. A recent study indicates that persons who chew tobacco tend to experience the loss of the ability
to remember at an early age. Chewing tobacco manufacturers try to remember what impact the report may
have upon their product.
A. _____taste_________________ B.______down__________ C._______down___________
Down 13. Americans buy most of their goods in packages. A recent decline in the price of oil products
has caused a decline in the price of plastic packages. Paper package manufacturers wonder about the
impact upon their product.
A. ______ substitute good _____ B.______down__________ C._______down___________
Up 14. Older Americans begin to believe that age is more a state of mind than a chronological fact. They
begin to dress like younger people who ride skateboards and begin to ride skateboards to the grocery store.
Skateboard manufacturers begin to wonder about the impact upon their product.
A. _____taste_______________ B.________up__________ C._________up___________
Down 15. The Consumer Product Safety Commission reports that All Terrain Vehicles are exceptionally
dangerous. Americans accept the report as factual. ATV manufacturers wonder about the impact upon
their product.
A. _____taste________________ B.______down__________ C._______down___________