Unit 2

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Unit 2 Graph Practice
2
Draw a graph that shows what happens when more
and more firms begin to produce a good.
3
Pizza Parlors In Fort Wayne 1970 - 2008
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Pizza Parlors In Fort Wayne 1970 - 2008
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Very Simple The more firms producing the good
the greater the supply of that good!
Explain Why This Happens
5
Draw a graph that shows what happens when
consumer taste for a product improves.
6
Flat Screen TVs
Price
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Flat Screen TVs
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Fill in the blanks There is a change in
________ and a change in the quantity___________
Fill in the blanks There is a change in DEMAND
and a change in the quantity SUPPLIED
8
Draw a graph that shows what happens when the
price of a resource used to make a good increases.
9
Shirts When Cloth Prices Go Up
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Shirts When Cloth Prices Go Up
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When the cost of a resource goes upproducers
cannot make as many products as they did before.
Explain Why This Happens
11
Draw a graph that shows what happens when
consumer income rises and the good is a
NORMAL GOOD.
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Won the Lottery - Steaks
Price
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Win the Lottery- Steaks
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Normal Good as your income goes up, you want
more of a normal good. As your income falls, you
want less of a normal good
Define Normal Good
14
Draw a graph that shows what happens when
something like a war destroys their current
technology.
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Production After A War
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Production After A War
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The ability to produce at the previous level is
no longer possible.
Explain Why This Happens
17
Draw a graph that shows what happens to Good A
when the price of a complementary Good B
decreases.
18
Good B is on Sale Graph of Good A
Price
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Good B is on sale Graph of Good A
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Complements are goods that are used together. As
the price of Good A goes down, you can afford
more of that goodand therefore you also buy more
of its complement, Good B.
Define Complement Goods
20
Draw a graph that shows what happens when income
rises and the good is an inferior good.
21
Win the Lottery Garage Sale Mowers
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Win the Lottery Garage Sale Mowers
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Inferior Good as your income goes up, you want
less of an inferior good. As your income falls,
you want more of an inferior good
Define Inferior Good
23
Draw a graph that shows what happens when
consumers believe that the price of a good will
increase in the near future.
24
Consumer Speculation That Diamond Prices Will
Increase With African Wars
Price
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Quantity
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Consumer Speculation That Diamond Prices Will
Increase With African Wars
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If you think the price of something is going to
increase tomorrowyou hurry and buy it today
before that happens.
Explain why this happens.
26
Draw a graph that shows what happens when
producers start leaving a market.
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Record Stores in Fort Wayne 1968 - 2008
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Record Stores in Fort Wayne 1968 - 2008
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Very Simple The less producers there are of a
good or service the less available the goods and
services they produce.
Explain Why This Happens
29
Draw a graph that shows what happens when a good
is no longer popular with the consumers.
30
Sony Walkmans 1980 - 2008
Price
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Quantity
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Sony Walkmans 1980 - 2008
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Fill in the blanks As demand for the good
DECREASES , the price FALLS , and the QUANTITY
supplied decreases.
Fill in the blanks As demand for the good ____
, the price _____ , and the _____ supplied
decreases.
32
Draw a graph that shows what happens to the
demand for Good A when the price of its
complement goes up.
33
Basketball Prices Skyrocket Graph Hoops
Price
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Quantity
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Basketball Prices Skyrocket Graph Hoops
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Price
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Good A and Good B are COMPLEMENTS they are used
together. If the price of Good B goes up then
people buy less of itand therefore have less
need to buy Good A
Explain Why This Happens
35
Draw a graph that shows what happens in the
two-pocket folder industry when three-pocket
folders are hard to sell at half their previous
price.
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Two Pocket Folder Industry Alternate Good
Price
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Two Pocket Folder Industry Alternate Good
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If you currently make three pocket folders and
you find out you can make more money making two
pocket foldersyou switch!
Explain Why This Happens
38
Draw a graph that shows what happens when the
consumer suspects that prices may fall in the
future.
39
Rumors that GM will soon be letting all customers
buy at employee pricing
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Rumors that GM will soon be letting all customers
buy at employee pricing
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You plan to buy a goodbut you believe it will go
on sale next week. So for now, your demand for
the good diminishes.
Explain Why This Happens
41
Draw a graph that shows what happens when the
price of a substitute increases.
42
Old NavyTee Prices Up Graph Gap Tees
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Old Navy Tee Prices Up Graph Gap Tees
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As the price of Buckle T-shirts Increase People
decide to buy more Gap T-shirts instead
Explain What Happens
44
Draw a graph that shows what happens when the
price of a substitute decreases.
45
The Price of Dell Computers Go Down Graph Apple
Computers
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S
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The Price of Dell Computers Go Down Graph Apple
Computers
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As Dell Computers become cheaper and cheaper,
they become more attractive to the consumers than
so people stop buying as many Apple Computers
Explain Why This Happens
47
Draw a graph that shows what happens when the
number of consumers increase.
48
Cheap Housing When Soldiers Return After WW II
Price
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Cheap Housing When Soldiers Return After WW II
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Explain What Happens
More Consumers Leads To More Buying
50
Draw a graph that shows what happens when there
is a profound improvement in technology.
51
Production After The Invention of The Computer
Chip
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Production After The Invention of The Computer
Chip
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Once computers were part of the production
processwe were able to make sooooooooooo much
more.
Explain Why This Happens
53
Draw a graph that shows what happens when the
number of consumers decrease.
54
Pitchforks After The Bubonic Plague
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Pitchforks After The Bubonic Plague
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Less People Less Farmers Less Consumers
Demand for Pitchforks Falls
Explain Why This Happens
56
Draw a graph that shows what happens to demand
when a college football star signs a pro contract.
57
Demand When Income Is Expected To Increase
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Demand When Income Is Expected To Increase
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You spend more money when you think your income
will be going up soon.
Explain What Happens
59
Draw a graph that shows what happens when you
anticipate losing your income.
60
Stock Market Crash Is Eating Away At Retirement
Incomes
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Stock Market Crash Is Eating Away At Retirement
Incomes
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As the elder generation sees its retirement
income fading awaythey are reluctant to continue
living their present lifestyle and make fewer
purchases.
Explain Why This Happens
62
Draw a graph that shows what happens when the
price of a resource used to make a good decreases.
63
Houses When Lumber Prices Go Down
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Houses When Lumber Prices Go Down
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When the cost of a resource goes downproducers
can make more products than they did before.
Explain Why This Happens
65
Draw a graph that shows what happens when a tax
on the producers is removed.
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Yacht Supply After The Watercraft Production Tax
Was Removed
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Yacht Supply After The Watercraft Production Tax
Was Removed
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A tax on a producer is basically a cost. Once a
cost is removed, more can be produced using the
same resources.
Explain Why This Happens
68
Draw a graph that shows what happens when the
government taxes the production of a good.
69
Pollution After Carbon Emissions Were Taxed
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Pollution After Carbon Emissions Were Taxed
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Explain Why This Happens
A tax is a cost. If the costs go up for a
producerthey are not able to produce as much as
they were before.
71
Draw a graph that shows what happens when
production of a good is subsidized.
72
Hybrid Cars When The Government Pays Automakers
1000 Per Car
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Hybrid Cars When The Government Pays Automakers
1000 Per Car
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A subsidy reduces the costs of producing a good.
So when costs fall the producer can make more.
Explain Why This Happens
74
Draw a graph that shows what happens when the
government stops subsidizing the production of a
good.
75
Truck Industry When Government Removes Subsidy
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Truck Industry When Government Removes Subsidy
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Now that the government wants people to ship by
rail instead of by road, they have taken away a
trucking subsidy. So the number of trucks hauling
goods declines.
Explain Why This Happens
77
Draw a graph that shows what happens when an
alternate goods price increases dramatically.
78
Softball Industry When Baseballs Sell For Twice
The Price
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Softball Industry When Baseballs Sell For Twice
The Price
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An ALTERNATE GOOD is made using the same
resources as the good a producer is currently
making. A producer will switch to that good if
she can make more money producing the alternate.
Explain What An Alternate Good Is
80
Draw a graph that shows what happens when
producers suspect that the price of the good they
are making will fall in the near future.
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Skinny Jeans In The U.S. When The Price Of These
Falls In Paris
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Skinny Jeans In The U.S. When The Price Of These
Falls In Paris
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American jeans makers predict that all those
jeans in the warehouses will not be in fashion in
the U.S. in a few months so they want to dump
them before that happens!
Explain Why This Happens
83
Draw a graph that shows what happens when
producers anticipate the price of their goods
will increase in the future.
84
Corn Futures Are Trending Upward
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Corn Futures Are Trending Upward
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Farmers decide to put the corn in the silos
because they hope the longer they hold on to it
the more they will be able to sell it for.
Explain Why The Supply Of Corn Falls In The Market
86
Draw a graph showing perfectly inelastic demand.
87
Price
Perfectly Inelastic Demand
D
Quantity
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Price
Perfectly Inelastic Demand
D
Quantity
WHAT IS MEANT BY PERFECTLY INELASTIC?
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Price
Perfectly Inelastic Demand
D
Quantity
Qe
That if the price goes up or if the price goes
down, the quantity demanded stays the same. A
change in price has NO impact on the quantity
demanded!
90
Draw a graph showing perfectly elastic demand.
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Price
Perfectly Elastic Demand
D
Quantity
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Price
Perfectly Elastic Demand
D
Quantity
WHAT IS MEANT BY PERFECTLY INELASTIC?
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Price
Perfectly Elastic Demand
Pe
D
Quantity
That if the price goes up, the quantity demanded
will change to zero. A change in price completely
changes the quantity demanded!
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