Question

supply & demand determinants
supply determinants
demand determinant

1. number of sellers changes
2. people enter or leave market
3. technology changes
4. preferences/trend change
5. costs of production change
6. incomes rise or fall
7. opportunities in other markets change
8. substitute good change in price
9. natural events occur
10. complementary good changes in price
11. expectations of price changes
12. expectations of a future change in income or price
13. auto workers agree to a pay and benefits cut; the supply of cars will (increase or decrease). which determinant causes this change? ____________ which way will the curve shift? (left/right) draw the new supply curve
14. government offers $3500 for older model trade - ins; producers expect sales to increase. the supply of cars will (increase or decrease).

which determinant causes this change? ____________
which way will the curve shift? (left/right) draw the new supply curve

1. government offers subsidy payments to auto producers that make hybrid cars. the supply of hybrid cars will (increase or decrease).

which determinant causes this change? ____________
which way will the curve shift? (left/right) draw the new supply curve

1. steel prices rise by 10%. the supply of cars will (increase or decrease).

which determinant causes this change? ____________
which way will the curve shift? (left/right) draw the new supply curve

1. large auto producers go bankrupt. the supply of cars will (increase or decrease).

which determinant causes this change? ____________
which way will the curve shift? (left/right) draw the new supply curve

Explanation:

Question 6

Step 1: Analyze Cost Impact

A pay and benefits cut for auto workers reduces production costs (labor cost is part of production costs).

Step 2: Determine Supply Change

Lower production costs mean producers can supply more at each price, so supply increases.

Step 3: Identify Determinant

From the table, "Costs of production change" (item 9 in Supply Determinants) is the cause.

Step 4: Determine Curve Shift

An increase in supply shifts the curve to the right (more quantity supplied at each price).

Step 1: Analyze Expectations Impact

Producers expect sales to increase due to the trade - in offer, so they will adjust their current supply based on expectations of future sales.

Step 2: Determine Supply Change

If producers expect higher future sales, they may increase current supply (or be more willing to supply now). So supply increases.

Step 3: Identify Determinant

From the table, "Expectations of price changes" (item 12 in Supply Determinants) - here it's expectations of sales (related to price - quantity relationship) that drives the change.

Step 4: Determine Curve Shift

An increase in supply shifts the curve to the right.

Step 1: Analyze Subsidy Impact

A subsidy to auto producers for making hybrid cars reduces their production costs (the government is offsetting some costs).

Step 2: Determine Supply Change

Lower production costs (due to subsidy) lead to an increase in supply (producers can supply more hybrid cars at each price).

Step 3: Identify Determinant

This falls under "Costs of production change" (item 9 in Supply Determinants) as the subsidy affects production costs.

Step 4: Determine Curve Shift

An increase in supply shifts the curve to the right.

Answer:

• Supply change: Increase
• Determinant: Costs of production change
• Curve shift: Right

Question 7