Law of demand
Nonprice determinant of demand
Change in quantity demanded
Increase/decrease in demand
1. Suppose you are planning to conduct a study of the running shoe market. List the factors that you believe would cause changes in the demand for running shoes. In each case, note whether the relationship would be positive (direct) or negative (inverse). Also list the factors that you believe would affect the supply, again noting the nature of the relationship.
2. In each case below, identify the effect on the market for steak.
(a) An increase in the price of lamb.
(b) A decrease in the population.
(c) An increase in consumer income.
(d) A decrease in the price of steak sauce.
(e) An increase in advertising by chicken producers.
3. What effect will each of the following have on the demand for product X?
a. Product B becomes more fashionable;
b. The price of substitute product S falls;
c. A decline in incomes if X is an inferior good;
d. Consumers anticipate the price of X will be lower in the near future;
e. The price of complementary good C falls;
f. Foreign tariff barriers on X are eliminated;
g. A decline in incomes if X is a normal good;
4. What factors might increase the demand for wheat?
5. Identify whether each of the following involves a shift in the demand curve or a movement along it :
a. Auto sales rise as consumer income rises;
b. Fish prices fall after the Pope allows Catholics to eat meat on Friday;
c. A gasoline tax lowers the consumption of gasoline;
d. After a disastrous wheat blight, bread sales go down;
e. After a disastrous wheat blight, peanut butter and jelly sales go down.
6. True or false? Explain
a. Failure of Brazil’s coffee crop will lower the...