Markets: Demand

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MarketsDemand SupplyProblems

• Dr. Dennis Foster

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• 1. In the market for oranges, what will happen
  if there is great weather in Florida and
  California?

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• 1. In the market for oranges, what will happen
  if there is great weather in Florida and
  California?

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• 2. In the market for eggs, what will happen if
  they are found to raise cholesterol levels and
  raise the risk of heart problems?

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• 2. In the market for eggs, what will happen if
  they are found to raise cholesterol levels and
  raise the risk of heart problems?

Demand decreasesprice falls output falls
New Price
New Demand
NewQuantity
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• 3. In the market for fine dining, what will
  happen if incomes across the population rise?

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• 3. In the market for fine dining, what will
  happen if incomes across the population rise?

Demand increasesprice rises output rises
New Price
New Demand
NewQuantity
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• 4. In the market for Hawaiian vacations, what
  will happen if tourists are killed in Miami and
  hotel workers (in HI) get higher wages?

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• 4. In the market for Hawaiian vacations, what
  will happen if tourists are killed in Miami and
  hotel workers (in HI) get higher wages?

Demand increases Supply decreasesprice rises
output ???
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• 4. In the market for Hawaiian vacations, what
  will happen if tourists are killed in Miami and
  hotel workers (in HI) get higher wages?

Demand increases Supply decreasesprice rises
output falls
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• 5. In the market for cookbooks, what will
  happen if scientists find a promising cure for
  AIDS?

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• 5. In the market for cookbooks, what will
  happen if scientists find a promising cure for
  AIDS?

Probably no effect on supply and demand.
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• 6. In the market for beef, what will happen if
  the price of pork rises and the government
  restricts the import of beef?

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• 6. In the market for beef, what will happen if
  the price of pork rises and the government
  restricts the import of beef?

Demand increases Supply decreasesprice rises
output ???
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• 6. In the market for beef, what will happen if
  the price of pork rises and the government
  restricts the import of beef?

NewSupply
Demand increases Supply decreasesprice rises
output rises.
New P
NewDemand
NewQ
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• 7. In the market for apartments, what will
  happen if NAUs enrollment increases 25?

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• 7. In the market for apartments, what will
  happen if NAUs enrollment increases 25?

Demand increasesprice rises output rises
New Price
New Demand
NewQuantity
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• 8. In 7 (market for apartments), what will
  happen if NAU students successfully lobby the
  city council to establish a rent ceiling at Pe?

New Price
New Demand
NewQuantity
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• 8. In 7 (market for apartments), what will
  happen if NAU students successfully lobby the
  city council to establish a rent ceiling at Pe?

Price
Off Mkt Price
Supply
Fixed Price
New Demand
Old Demand
Quantity
Available Quantity
DesiredQuantity
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• What is the problem in this market?

• There is shortage of apartments . . . at the
  controlled price!
• There are fewer apartments available than would
  be true if the rents were not controlled.
• Losers landlords, students that cant find
  apartments, students that can find apartments but
  must pay higher costs.
• Winners the whiners.

How can tenants pay more in this market?

• Under the table payments.
• Sub-leasing.
• Special deposits (perhaps non-refundable).
• Reduced quality.
• Unfair discrimination.
• Parking, and other, fees.

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• 9. In the market for new cars, what will happen
  if gas prices jump by 25 and auto workers go on
  strike?

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• 9. In the market for new cars, what will happen
  if gas prices jump by 25 and auto workers go on
  strike?

NewSupply ???
Demand decreases Supply decreasesoutput
falls price ???
Price
Supply
New Price ??
Pe
New Price ??
Demand
New Demand ???
Quantity
Qe
New Q
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• 9. In the market for new cars, what will happen
  if gas prices jump by 25 and auto workers go on
  strike?

NewSupply
Demand decreases Supply decreasesoutput
falls price same!
Price
Supply
Pe
New P
Demand
New Demand
Quantity
New Q
Qe
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• 10. In the market for PCs, what will happen if
  workers see that the future will require that
  they have computer skills and Intel invents a
  new, bigger, faster, cheaper computer chip?

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• 10. In the market for PCs, what will happen if
  workers see that the future will require that
  they have computer skills and Intel invents a
  new, bigger, faster, cheaper computer chip?

Demand increases Supply increasesoutput
rises price ???
New Supply ???
New Price ??
New Demand ???
New Price ??
New Q
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• 10. In the market for PCs, what will happen if
  workers see that the future will require that
  they have computer skills and Intel invents a
  new, bigger, faster, cheaper computer chip?

Demand increases Supply increasesoutput
rises price falls.
New Supply
New P
New Demand
New Q
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• 11. In the market for peanuts, what will happen
  if the government establishes licensing as a
  mechanism for raising peanut farmer incomes?

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• 11. In the market for peanuts, what will happen
  if the government establishes licensing as a
  mechanism for raising peanut farmer incomes?

NewSupply
Price
Supply
New Price
Supply decreasesoutput falls price rises
Pe
Demand
Quantity
New Q
Qe
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• 12. In the market for the Xbox, what will happen
  if the price of Sony Playstations fall as does
  the price of games that are played on the Xbox?

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• 12. In the market for the Xbox, what will happen
  if the price of Sony Playstations fall as does
  the price of games that are played on the Xbox?

Demand increases decreasesoutput ??? price
???
New Price ??
New Demand ???
New Price ??
New Demand ???
New Q ??
New Q ??
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• 12. In the market for the Xbox, what will happen
  if the price of Sony Playstations fall as does
  the price of games that are played on the Xbox?

Demand increasesoutput rises price falls.
New P
New Demand
New Q
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MarketsDemand SupplyProblems

• Dr. Dennis Foster