. Given the products below and the events that affect them, indicate what happen

Question

. Given the products below and the events that affect them, indicate what happens to demand or supply, and the equilibrium price and quantity. Identify the determinant of demand or supply that causes the shift. You must be specific in your answers. (a) Blue jeans. The wearing of blue jeans becomes less fashionable among consumers. (b) Computers. Parts for making computers fall in price because of improvements in technology. (c) Lettuce. El Nino produces heavy rains that destroy a significant portion of the lettuce crop. (d) Chicken. Beef prices rise because severe winter weather reduces cattle herds.

Explanation / Answer

(a) Demand for blue jeans decreased because of a decline in buyer tastes for blue jeans, thus decreasing the equilibrium price and quantity. (b) Supply of computers increases because of an improvement in technology, thus decreasing the equilibrium price and increasing the equilibrium quantity. (c) Supply of lettuce decreases because of a fall in the number of suppliers, thus increasing the equilibrium price and decreasing the equilibrium quantity. (d) Demand for chicken increases because of an increase in the price of a substitute food (beef prices rose because of a supply decrease), thus increasing the equilibrium price and quantity.

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