1. For additional practice, work the following problems without cheating and looking at the
answers. Be sure to draw the diagrams and label them with price, quantity, initial price, initial
quantity, which curve is which, which is the original and the new curve etc.
Our three step process will be very useful here! (curve? direction? result?)
Suppose we are analyzing the market for baseball gloves, what happens to price and quantity
when:
More kids move to town and join little league.
PETA successfully lobbies to get laws put in place for more humane treatment of cows and the
price of leather increases.
2. Major League Baseball goes through a steroid scandal and baseball becomes less popular.
PETA successfully lobbies to get laws put in place for more humane treatment of cows and the
price of leather increases and Major League Baseball goes through a steroid scandal and baseball
becomes less popular.
3. The price of basketballs falls.
Registration fees for little league increase.
4. Incomes of families in Wilmington increase. (what assumption have you made?)
Spalding comes up with a new way to automate glove manufacturing and reduce their costs of
making gloves.
5. The price of video games increases.
Wilmington has an unusually wet spring and summer with lots of rain.
6. Academy sports opens a store in Wilmington to compete with Dickโs Sporting Goods.
Wilmington has an unusually wet spring and summer with lots of rain and Academy Sports
opens a store in Wilmington to compete with Dickโs Sporting Goods.
7. During the middle of the summer consumers expect gloves to go on sale in a few weeks as fall
approaches.
A new study comes out showing that people who play little league have higher lifetime earnings.
8. Sellers expect that when following the fourth of July baseball will increase in popularity and
price will increase.
The price of baseballs falls.
9. The price of baseballs falls and Spalding figures out how to automate production and save costs.
10. For additional practice, work the following problems without cheating and looking at the
answers. Be sure to draw the diagrams and label them price, quantity, initial price, initial
quantity, which curve is which, which is the original and the new curve etc.
Suppose we are analyzing the market for baseball gloves, what happens to price and quantity
when:
More kids move to town and join little league.
PETA successfully lobbies to get laws put in place for more humane treatment of cows and the
price of leather increases.
P
Q
S
D
P2
P0
Q0
Q2
D2
1. Demand
2. Shifts Right
3. Price Increases
Quantity increases
P
Q
S
D
P2
P0
Q0
Q2
S2
1. Supply
2. Shifts Left
3. Price Increases
Quantity Decreases
11. Major League Baseball goes through a steroid scandal and baseball becomes less popular.
PETA successfully lobbies to get laws put in place for more humane treatment of cows and the
price of leather increases and Major League Baseball goes through a steroid scandal and baseball
becomes less popular.
P0
P
Q
S
D
P2
Q0
Q2
D2
1. Demand
2. Shifts Left
3. Price Decreases
Quantity Decreases
P
Q
S
D
Q2
P0
Q0
S2
1. Supply and Demand
2. Supply Shifts Left
Demand Shifts Left
3. Price is Ambiguous
Quantity decreases
D2
12. The price of basketballs falls.
Registration fees for little league increase.
P0
P
Q
S
D
P2
Q0
Q2
D2
1. Demand
2. Shifts Left
3. Price Decreases
Quantity Decreases
P0
P
Q
S
D
P2
Q0
Q2
D2
1. Demand
2. Shifts Left
3. Price Decreases
Quantity Decreases
13. Incomes of families in Wilmington increase. (what assumption have you made?)
Spalding comes up with a new way to automate glove manufacturing and reduce their costs of
making gloves.
P
Q
S
D
P2
P0
Q0
Q2
D2
1. Demand
2. Shifts Right
3. Price Increases
Quantity increases
P
Q
S
D
P2
P0
Q0
Q2
S2
1. Supply
2. Shifts Right
3. Price Decreases
Quantity Increases
14. The price of video games increases.
Wilmington has an unusually wet spring and summer with lots of rain.
P
Q
S
D
P2
P0
Q0
Q2
D2
1. Demand
2. Shifts Right
3. Price Increases
Quantity increases
P0
P
Q
S
D
P2
Q0
Q2
D2
1. Demand
2. Shifts Left
3. Price Decreases
Quantity Decreases
15. Academy sports opens a store in Wilmington to compete with Dickโs Sporting Goods.
Wilmington has an unusually wet spring and summer with lots of rain and Academy Sports
opens a store in Wilmington to compete with Dickโs Sporting Goods.
P
Q
S
D
P2
P0
Q0
Q2
S2
1. Supply
2. Shifts Right
3. Price Decreases
Quantity Increases
P
Q
S
D
P2
P0
Q0
S2
1. Supply and Demand
2. Supply Shifts Right
Demand Shifts Left
3. Price Decreases
Quantity is Ambiguous
D2
16. During the middle of the summer consumers expect gloves to go on sale in a few weeks as fall
approaches.
A new study comes out showing that people who play little league have higher lifetime earnings.
P
Q
S
D
P2
P0
Q0
Q2
D2
1. Demand
2. Shifts Right
3. Price Increases
Quantity increases
P0
P
Q
S
D
P2
Q0
Q2
D2
1. Demand
2. Shifts Left
3. Price Decreases
Quantity Decreases
17. Sellers expect that when following the fourth of July baseball will increase in popularity and
price will increase.
The price of baseballs falls.
P
Q
S
D
P2
P0
Q0
Q2
S2
1. Supply
2. Shifts Left
3. Price Increases
Quantity Decreases
P
Q
S
D
P2
P0
Q0
Q2
D2
1. Demand
2. Shifts Right
3. Price Increases
Quantity increases
18. The price of baseballs falls and Spalding figures out how to automate production and save costs.
P
Q
S
D
Q2
P0
Q0
S2
1. Supply and Demand
2. Supply Shifts Right
Demand Shifts Right
3. Price is Ambiguous
Quantity IncreasesD2
