Market for luxury cars

Market for luxury cars

1. Case a. Market for hot chocolate, A better method of harvesting cocoa beans is introduced, Ceteris Paribus
2. Case b: Market for luxury cars, The economy rebounds and many people see their average income increase substantially, Ceteris Paribus.
3. Case c: Market for I-phones. Samsung introduces a new Galaxy phone that proves to be very popular with consumers. At the same time, Apple decides to move the production of I-phones from low-wage factories in China to higher-wage factories in California. Ceteris Paribus.
4. Case d: Market for strawberries. Severe floods hit the South-east and caused a fungus to develop on young strawberry plants, Ceteris Paribus. Asa a consequence, many farmers destroyed their strawberry crops to prevent the spread of the disease.
5. Case e: Market for ramen noodles, an inferior good. Many well-to-do consumers lose their jobs and have to give up luxuries, Certeris Paribus.

For each of these cases.
1. Among all the variables that shift the curves, which shifter(s)/variable(s) apply(ies) in this case?
2. Which curve(s) shift(s)?
3. Does it increase or decrease?
4. What is the direction of the shift(s)?
5. Conclusion: What happens to P* and Q* (increases/decreases/ambigious)

For each of the following cases, you will use the Supply & Demand theory and model to determine what will happen to the equilibrium price (P*) and equilibrium (Q*) in each market. Explain how you reach your conclusions by following the 5 steps for each case a,b,... You may use the blank supply/demand graphs distributed with this problem. Only your written answers will be graded.

 
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