Answer to Question #277019 in Microeconomics for Jouj

Question

A. Choose a product with which you are familiar (i.e. Starbuck’s Frappuccinos) that will be

affected by the dynamics of the market economy.

B. Make up two different headlines for two graphs relating to factors causing a shift in demand,

then show how each will impact the product related to either surpluses or shortages and

ultimately a change in the equilibrium price. One must be an increase in demand, the other a

decrease in demand. You may only use each cause of a shift once!!! such as population.

C. Do the same for two factors causing a shift in supply. You must draw a separate graph for

each factor. You may only use each cause of a shift once!!! such as technology.

D. Type a paragraph about each of your graphs (four total) to predict whether the product will

demonstrate an increase or decrease in demand or supply and what will have to happen

economically (i.e., shortage, surplus, price increase, price decrease).

Answer 1

A)    Starbucks

B)    The change in Starbucks demand will be impacted by individuals’ earnings and lifestyle. In this scenario, a fall in income encourages people to consume less coffee, but an increment encourages them to spend so much. The earlier results in a movement to the left on the demand curve, whereas the subsequent results in an expansive shift to the right on the demand curve, indicating a rise in demand. On the other hand, a culture that encourages coffee use causes Starbucks to move its demand curve to the right, indicating a gain, but a society that discourages coffee consumption results in a fall in consumption.

C) Starbucks' supply change will be impacted by people's wealth and culture. In this scenario, a fall in income encourages individuals to reduce their coffee intake, but a rise encourages them to spend additional. The previous results in a movement to the left on the demand curve, whereas the latter results in an expansive shift to the right on the demand curve, indicating a rise in demand. On either hand, a culture that encourages coffee use causes Starbucks to move its demand curve to the right, indicating a gain, but a society that discourages coffee intake results in a fall in demand.

D) Price hikes, surpluses, and price decreases all impact demand and supply curves to move.