Macro Economics Cases in the United States
The price of natural gas, a resource used by manufacturers throughout the United States, doubles. Price increases because, the companies that sell the spiral notebooks need to mark up their price in order to keep afloat with the rising cost of natural gas. Demand is not affected. The determinant for demand on the TRIBE chart in this scenario would be related goods and services, since the price for a good that is used to produce spiral notebooks is increasing, thus leading to an increase in the price of spiral notebooks. Supply would decrease and shift to the left and quantity would decrease.
Equilibrium price would increase and equilibrium quantity would decrease. b) The government provides a subsidy for notebook manufacturers. In this instance the price of spiral notebooks would decrease since the government would be assisting the industry that makes spiral notebooks; financially to ensure the price of spiral notebooks remains low. Additionally, price would decrease since the business responsible for spiral notebook production and sale, would not feel the need to raise the price since they are receiving government funds.
Quantity would increase since the more consumers would be attracted to the low prices, and the manufacturers would produce more goods, since they would be receiving economic assistance and would not have to worry so much about losing money from producing too many notebooks. Demand would be unaffected, since only quantity demanded would be changing and not the whole demand curve. Supply would increase or shift to the right. Equilibrium price would decrease and equilibrium quantity would increase.
Last of all, the determinant for demand in this scenario would be Taxes, Subsidies, and government regulation in the ROTTEN chart. c) Your income increases and spiral bound notebooks are an inferior good. The price of spiral notebooks decreases, and Quantity would decrease since fewer consumers that have experienced income increases are buying spiral notebooks, and manufacturers are producing less spiral notebooks since the popularity of them has decreased.
There would be a decrease in demand since spiral bound notebooks are not normal goods and would not adhere to the increase in your income, and demand would shift left. Supply would not be affected or would be indeterminate. Equilibrium price and quantity would decrease. The determinant for demand would be income in the TRIBE chart, since consumer income is directly affecting the decrease in demand. d) The price of binders and paper, a substitute for spiral bound notebooks, decreases. Price decreases, along with quantity, and demand for spiral bound notebooks decreases or shifts to the left. While supply is unaffected or indeterminate. Equilibrium price and quantity would decrease.
The determinant for demand would be number of firms in the industry in the ROTTEN chart since the 2 other businesses that produce binders and paper act as substitutes for the business that makes spiral notebooks. e) A new binding machine is invented that binds in half the time would result in a decrease in price and an increase in quantity. Supply would increase and shift to the right, while demand would be unaffected and indeterminate. equilibrium price would decrease while equilibrium quantity will increase. The determinant of the demand would be technology (productivity) on the ROTTEN chart.
The price of all goods using paper is expected to double next month. Price would increase, along with the quantity. Demand would increase for spiral notebooks or shift to the right, while supply would be unaffected or indeterminate. Equilibrium price and quantity would increase. The determinant for demand would be expectations off the tribe chart. g) The government raises taxes on businesses at the same time that students receive their supply list for the new school year. Supply would overall decrease and shift left. Demand would increase or shift right, in other words there would be a double shift.
Price would be indeterminate, and quantity would increase. Equilibrium price would stay the same since price is indeterminate, while equilibrium quantity would increase. The determinant for demand would be taxes subsidies and government regulation from the ROTTEN chart. h) The price of pens and pencils falls dramatically. Price would increase along with quantity and demand would increase or shift to the right. Supply would be unaffected. The equilibrium price and quantity would increase. The determinant for demand will be other goods price from the ROTTEN chart.