In 2001 an outbreak of hoof-and-mouth disease in Europe led to the burning of millions of cattle carcasses. What impact do you think this had on the supply of cattle hides, hide prices, the supply of leather goods, and the price of leather goods?
What effect will each of the following have on the demand for small automobiles such as the Mini-Cooper and Fiat 500?
Small automobiles become more fashionable.
The price of large automobiles rises (with the price of small autos remaining the same).
Income declines and small autos are an inferior good.
Consumers anticipate that the price of small autos will greatly come down in the near future.
The price of gasoline substantially drops.
What effect will each of the following have on the supply of auto tires? LO3.3
A technological advance in the methods of producing tires.
A decline in the number of firms in the tire industry.
An increase in the prices of rubber used in the production of tires.
The expectation that the equilibrium price of auto tires will be lower in the future than currently.
A decline in the price of the large tires used for semi trucks and earth-hauling rigs (with no change in the price of auto tires).
The levying of a per-unit tax on each auto tire sold.
The granting of a 50-cent-per-unit subsidy for each auto tire produced
Label each of the following scenarios with the set of symbols that best indicates the price change and quantity change that occur in the scenario. In some scenarios, it may not be possible from the information given to determine the direction of a particular price change or a particular quantity change. We will symbolize those cases as, respectively, “P?” and “Q?”. The four possible combinations of price and quantity changes are:
P ↓ Q? P? Q ↓
P ↑ Q? P? Q ↑
On a hot day, both the demand for lemonade and the supply of lemonade increase.
On a cold day, both the demand for ice cream and the supply of ice cream decrease.
When Hawaii’s Mt. Kilauea erupts violently, the demand on the part of tourists for sightseeing flights increases but the supply of pilots willing to provide these dangerous flights decreases.
In a hot area of Arizona where they generate a lot of their electricity with wind turbines, the demand for electricity falls on windy days as people switch off their air conditioners and enjoy the breeze. But at the same time, the amount of electricity supplied increases as the wind turbines spin faster.