Use supply and demand curves to illustrate how each of the following changes will affect the price and quantity of the stated product, ceterus paribus.

Before you guess, answer the following questions:
(1) Which determinant has changed?
(2) Will it affect supply or demand?
(3) Will supply or demand increase or decrease?
(4) GRAPH IT! What happens to price and quantity?

1. Computers Consumer incomes increase

(1) Which determinant has changed? Incomes (2) Will it affect supply or demand? Demand (3) Will supply or demand increase or decrease? Demand increases - they are normal goods (4) GRAPH IT! What happens to price and quantity? See graph above

2. Calculators Improved technology reduces the costs of production

(1) Which determinant has changed? Technology (2) Will it affect supply or demand? Supply (3) Will supply or demand increase or decrease? Supply increases (4) GRAPH IT! What happens to price and quantity? See graph above

3. Sony Play Station Computer prices drop

(1) Which determinant has changed? Price of other goods (2) Will it affect supply or demand? Demand (3) Will supply or demand increase or decrease? Demand decreases (assuming they are substitutes) (4) GRAPH IT! What happens to price and quantity? See graph above Or maybe: (1) Which determinant has changed? Price of other goods (2) Will it affect supply or demand? Supply assuming they are Sony computers (3) Will supply or demand increase or decrease? Supply increases (4) GRAPH IT! What happens to price and quantity? Price down, Quantity up See graph below

5. Cigarettes Reduced gov't farm subsidies increase the costs of production

(1) Which determinant has changed? Subsidies (Taxes) (2) Will it affect supply or demand? Supply (3) Will supply or demand increase or decrease? Supply decreases (4) GRAPH IT! What happens to price and quantity? See graph above

6. Coffee a report links coffee drinking to heart attacks

(1) Which determinant has changed? Tastes (2) Will it affect supply or demand? Demand (3) Will supply or demand increase or decrease? Demand decreases (4) GRAPH IT! What happens to price and quantity? See graph above

7. Wood furniture Lumber prices rise

(1) Which determinant has changed? Price of resources (2) Will it affect supply or demand? Supply (3) Will supply or demand increase or decrease? Supply will decrease (4) GRAPH IT! What happens to price and quantity? See graph above

8. Steel Furniture Wood furniture prices increase

(1) Which determinant has changed? Price of other goods (2) Will it affect supply or demand? Demand (3) Will supply or demand increase or decrease? Demand will increase (4) GRAPH IT! What happens to price and quantity? See graph above NOTE: Higher LUMBER prices (see #7 above) may have an effect on STEEL furniture by making wood furniture more expensive.

9. Computers 5 new firms enter the industry

(1) Which determinant has changed? Number of producers (2) Will it affect supply or demand? Supply (3) Will supply or demand increase or decrease? Supply (4) GRAPH IT! What happens to price and quantity? See graph above

10. Cigarettes Gov't announces a large tax increase will begin in 1 week

(1) Which determinant has changed? Expected Price (tax takes effect next week) (2) Will it affect supply or demand? Demand (3) Will supply or demand increase or decrease? Demand increases today (4) GRAPH IT! What happens to price and quantity? See graph above (prices increase today)

11. Gasoline Gasoline taxes increase

(1) Which determinant has changed? Taxes (2) Will it affect supply or demand? Supply (3) Will supply or demand increase or decrease? Supply decreases (4) GRAPH IT! What happens to price and quantity? See graph above

12. Soybeans The price of corn rises

(1) Which determinant has changed? Price of other goods (2) Will it affect supply or demand? Supply - price of other goods produced by the same farm (3) Will supply or demand increase or decrease? Supply of soybeans decreases (4) GRAPH IT! What happens to price and quantity? See graph above