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Econ Essay

352 words - 2 pages

Associate Level Material
Appendix B

Price Elasticity and Supply & Demand

Fill in the matrix below and describe how changes in price or quantity of the goods and services affect either supply or demand and the equilibrium price. Use the graphs from your book and the Tomlinson video tutorials as a tool to help you answer questions about the changes in price and quantity

|Event |Market affected by event |Shift in supply, demand, or both. |Change in equilibrium |
| | |Explain your answer. | |
|Frozen orange crops in California |Orange juice |Supply (left)—Not ...view middle of the document...

What do substitutes refer to in economics? Give an example of two substitutes.
It refers to an alternate good that consumer are able to pruchease when the original good had a price increase. An example would be if the price of dole orange juice went up I would have to change to store brand to save money on the difference.

2. Define “Price Elasticity of Demand.” Give an example.
Is a measure of how much of the quantity demanded of a product responds to a change in the price of that product. An example would be if a family decided to stop using brand name products for store brand products because of the economy.
3. Determine if the demand for the following products is price elastic or price inelastic, and explain your answer. In your explanation, be sure to include how the necessity of a good and the availability of substitutes affect the price elasticity of demand in each of these specific cases:

• Gasoline as a commodity

• Gasoline sold at a local gasoline station

• Hotel rooms for people planning a vacation

• Hotel rooms for people on business to meet an important client

4. Define the Law of Demand and the Law of Supply. Give an example for each.

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