Supply and Demand + Mastery Test

Drag each factor to the correct location on the chart. The graphs show a change in demand for new cars in a particular neighborhood. Match the non-price determinants of demand with the type of shift in demand curve they are likely to cause.

Decrease: -prices of used cars in good condition drop -a factory in the neighborhood closes, causing many people to lose their jobs Increase: -Gas prices fall -People move into the area

Part D Based on your responses to the previous questions, how do demand curves move when there is an increase or a decrease in demand?

Demand curves move to the right when there is an increase in demand. They move to left when there is a decrease in demand.

Select the correct answer. Which scenario caused a change in quantity demanded for gas from point A to point B?

The price of gas fell

Select the correct answer from each drop-down menu. When more firms produce the same product, it means that _________ of that product is produced at a _________ quality.

-more -higher

Which phrase defines a demand schedule?

A table showing the quantity demanded for a good at different prices

Which phrase describes the substitution effect?

Buying cheaper alternatives when a product becomes expensive

Which phrase defines complementary goods?

Goods used in combination with other products

Part C Based on your answer to part B, should Kevin increase or decrease his prices toward the end of the season to avoid having unsold produce?

Kevin has seen that demand increases when prices decrease, so he should decrease his prices toward the end of the season to avoid having unsold produce.

Part B What is the author's main argument?

The author's main argument is that the actions of people are delaying the next ice age because of increased CO2 emissions.

Type your response in the box. What are the equilibrium price and equilibrium quantity in this situation?

The equilibrium price is $2.00, and the equilibrium quantity is 5,000 pounds.

Part C List three quotes from the article that support the author's point.

These quotes from the article support the author's point: "The fact that it's not is likely due to the extra CO2 that has been entering Earth's atmosphere from human activities. The burning of fossil fuels has spewed much of that CO2. As a result, people may be postponing the next glaciation, researchers now propose." "We are experiencing a climate that has been modified by human activity . . ." "Extra CO2 in the atmosphere may be extending the current warmth, the researchers now say."

Part B What is the relationship between the price and the number of necklaces Rachael supplies?

As the price goes up, the number of necklaces she supplies goes up.

Part B This graph shows how the demand for apples changed following positive news reports about the nutritional value of apples. Curve AB shows the demand before the news reports, while curve XY illustrates the demand after the news reports. Study the graph, and describe how the demand curve moved.

When consumers became aware of the nutritional value of apples, the demand for apples increased.People were willing to buy the apples at higher prices. Therefore, the demand curve moved to the right.

Drag each label to the correct location on the graph. When we combine the actions of producers and suppliers, we put the supply and demand curves on the same graph. Identify the demand curve and the supply curve.

blue (A) - demand curve red (D) - supply curve

Rachel sells handmade necklaces at local art fairs. Recently, she noticed an increase in the price of jewelry in stores. Encouraged by the rise in price, she increased her supply of necklaces. She keeps track of the number of necklaces she supplies each time her price changes and represents the information on this graph. Answer the questions that follow based on this supply curve. Part A Fill out this table with the number of necklaces Rachel has supplied at each price. Use the graph to estimate approximate numbers for necklaces supplied.

$30 - 8 $40 - 19 $50 - 32

Select the correct answer from each drop-down menu. _________ is the regulating force in the marketplace. If the number of companies producing an item increases, the price of the item will be _________ than before. _________ people will buy the item because it is cheaper.

- Competition - Lower - More

Select the correct answer from each drop-down menu. In a free market economy, the market, not the _________, determines prices. The interactions of _________ and _________ determine the price in the market.

-government -consumers -producers

In a previous Lesson Activity, you saw how Kevin the fruit vendor tracked changes in demand when he changed prices at his fruit stand. Kevin knows there are more elements that affect his sales, so he also tracked factors other than price—non-price determinants of demand—that changed the demand for his apples. In this activity, you will examine the effect of non-price determinants on Kevin's business. Part A This chart lists some of the situations in which Kevin has noticed a change in demand. Complete the chart by indicating whether you think these events caused an increase or a decrease in demand for his apples.

-increase -decrease -increase -decrease

Select the correct answer from each drop-down menu. Examine the graph and complete the sentences that follow. The price of leather has _________, which affects _________ cost. This non-price determinant of _________ caused the _________ curve to shift left. This results in a _________ price and a _________ quantity of _________.

-increased -resource -supply -supply -higher -lower -shoes

Select the correct answer from each drop-down menu. Complete these sentences based on the video you just watched. A rise in beef prices will cause the supply curve for steaks at restaurants to shift _________. The rise in steak prices is a result of a non-price determinant of supply. In this scenario, the non-price determinant of supply is _________. The change in foreign consumption of beef is an example of a non-price determinant of demand. In this scenario, the non-price determinant of demand is _________. The change in the non-price determinant of demand will cause the demand curve to shift _________. On a graph, the effect of these shifts in the demand and supply curves will cause the new equilibrium price to _________. As grown cows become scarcer, the price of beef _________.

-left -resource costs -consumer tastes and preferences -right -increase -increases

Select the correct answer from each drop-down menu. When the price of chocolate chip cookies increased to $3 per package, Samantha began to buy oatmeal cookies instead. This situation is an example of the _________. The supply curve slopes upward because at a higher price, producers have _________ to produce more. The price of shirts declines dramatically. Javier now feels richer and buys more shirts than he normally would. This situation is an example of the _________.

-substitution effect -an incentive -income effect

Read the scenario, and then answer the questions that follow. Kevin owns a fruit stand alongside a busy road. For several years, he has kept track of the number of apples that people purchase at different prices. He decides to graph the number of apples sold and the various prices at which he sold them. The graph shows his record of the number of apples sold at different prices. Part A Fill in the table with the number of apples Kevin sold at each price. Use the graph to estimate approximate quantities of apples.

1.00 - 6,000 2.00 - 4,000 3.00 - 2,000

Part C Kevin observed that as the demand for peaches grew, the demand for apples decreased. The graph depicts the fall in the demand for apples. Curve AB shows the initial demand, and curve XY illustrates the fall in demand due to the popularity of peaches. Study the graph, and describe how the demand curve moved.

As peaches became more popular, fewer people were willing to buy apples, especially at high prices. The demand for apples decreased, so the demand curve moved left.

Part B What is the relationship between the price of apples and the demand for apples among Kevin's customers?

As the price of apples goes up, the demand for apples goes down.

Which point on the demand curve represents the highest quantity demanded?

D

Part D From your perspective, what are some actions that people have undertaken that have caused the situation the article discusses?

Here are some factors that have caused the situation: more cars more SUVs more factories more people more animals

Question 2 Using your answers to question 1 and the economic knowledge you gained in this lesson, compose a three-paragraph essay that explains in economic terms the author's argument in the article. Be sure to write a topic statement, use relevant quotes from the article (and cite them), use proper grammar (including transitions, formal tone, and so on), and include a concluding statement. Also, be sure to apply at least three economic terms or concepts from this section in your writing.

The article "Glaciers on Ice—for Now" by Thomas Sumner discusses the role of human activity in delaying the next ice age on earth. It suggests that carbon dioxide (CO2) emissions resulting from human activities are extending the current interglacial period by keeping the atmosphere warm. The human population has grown rapidly in recent centuries. As the population grew, demand for goods and services also grew. The increasing demand for goods led to rapid industrialization around the world, and production of goods began on a large scale. A prime externality of factory production was the emission of CO2 into the air, which led to pollution and health hazards. Another cause for the high level of CO2 is vehicular pollution. When cars entered the market, only a small number of people owned cars. But in the early twentieth century, technological developments made the mass production of cars possible. This technology, a non-price determinant of supply, pushed up the supply of cars by lowering the cost of production and the time required to produce a car. An increase in supply brought down the price of cars so that even lower- and middle-income people could afford a car. As cars became more and more common, the amount of CO2 in the air rose. In 2015, the CO2 levels in the air increased to 400 parts per million, when the level should have been 245 parts per million. The article states that the extra CO2 was "added to the atmosphere" by human consumption. It states that "the future is murky" because of the climatic externalities of human activities.

Type your response in the box. A large factory in a small, impoverished country just decided to pay school tuition through high school for all the factory workers' children. List the effects this decision could have.

The decision to pay for the children's education could benefit the country substantially in the future. Education would equip the children with the skills and knowledge required for success in the professional arena. The skills and knowledge will enable them to get better jobs and make good money. As more citizens earn well, the economy will improve. Education will lead not only to financial success but also to social change and community development.

Part C How will a drastic fall in the price of necklaces affect the quantity of necklaces that Rachel supplies? Explain your answer.

The number of necklaces she supplies will drop because she will not make enough money from selling them to continue producing them.

Select the correct answer. Which scenario caused a change in the quantity supplied from point C to point D?

The price of corn increased

Warm-Up Type your response in the box. Read these two scenarios: Scenario 1Anne owns a clothing design business. The prices for her dresses have increased dramatically over the past six months. Excited by this success, she increases the production of her dresses. Scenario 2Adam, a new college graduate, is excited to furnish his first apartment in the city. What he's not excited about is the prices: everything seems so expensive. He hears that the furniture store down the street is having a half-price sale for two days. He goes to the store and buys a table and some chairs. What is driving Anne's and Adam's decisions?

The price of goods drives Anne's and Adam's decisions.

Read this article about glaciers. As you read, consider the environmental externalities of human activities. Question 1 Answer these questions based on the article you read. Part A Who is the author of this article?

Thomas Sumner