Xeco 212 Appendix B

Axia College Material
Appendix B

Price Elasticity and Supply & Demand

Fill in the matrix below and describe how changes in price or quantity of the goods and services affect either supply or demand and the equilibrium price. Use the graphs from your book and the Tomlinson video tutorials as a tool to help you answer questions about the changes in price and quantity

Event |Market affected by event |Shift in supply, demand, or both. Explain your answer. |Change in equilibrium | |Frozen orange crops in California |Orange juice |Supply (left)—Not as many available oranges to offer consumers. |Price will increase and quantity will decrease.   | |Hurricanes in the Gulf Coast

|Oil |When supply is limited price of fuel increases. The demand remains but people will decrease usage. |Price will increase when supply decreases and demand will remain unchanged. | |Cost of cotton decreases

|Clothes   |When price decrease demand increases and value changes.. |Price will decrease when supply increases and demand will increase. | |Technology improves efficiency in pasta manufacturing
|Grocery Stores
|Inventory will be able to accommodate demands of pasta at a reasonable price. |If supply increase and demand is unchanged it leads to lower price. | |

What do substitutes refer to in economics? Give an example of two substitutes.
Substitutes refer to alternative products or service for a specified item or service.
For a new house - mobile home or apartment
For a new car - a used car or public transportation.

Define “Price Elasticity of Demand.” Give an example.
Price elasticity of demand is a method used   to measure to show responsiveness of demand to change its price. (Elasticity = % change in quantity / % change in price) This is affected by substitutes products.
For example : If coffee increases by .50 cents, people could buy tea so a rise in coffee will decrease the demand.

Determine if the demand for the following products is price elastic or price...