Supply and Demand

Supply and Demand

The main purpose of studying a market is to be able to predict qualitatively and quantitatively changes in prices resulting from changes in demand and supply conditions.
For each of the following events, assume that either the supply curve or the demand curve (not both) shifted. Explain which curve shifted, if any, and indicate the qualitative direction of the shift, the new market equilibrium, and the new equilibrium price and quantity.
Using some of the concepts you learned from the module, discuss the questions below:
• From 1950 to 1979 the wages paid to fruit pickers increased while the number of fruit pickers employed decreased.
• During the same period the price of radio sets declined, while the number of radio sets purchased increased.
• Housing prices are rising but more houses are sold.
• Australian Airlines reduces its average plane fare by 30 percent in order to attract more customers.