For each, explain how each of the following factors

| November 24, 2016

Question
For each, explain how each of the following factors will affect demand or supply and the equilibrium price and quantity; that is, will demand or supply increase or decrease (shift left or right), will the equilibrium price increase or decrease, and will the equilibrium quantity increase or decrease? You should provide a brief explanation for why you shifted the demand or supply curve. In each case, only one curve will shift.

a) Over the past two decades, China’s rapid industrialization and growth caused it to be a large importer of crude oil and gasoline. Its growth has slowed dramatically over the past two years, causing a large decrease in its demand for these products. Crude oil and gasoline are traded on global markets, so this affects the US. Explain how this affects the market for gasoline in the US (does it affect the supply of gas available in the US, or does it affect the demand for gasoline by US consumers?)

b) The government’s requirement that ethanol be added to gasoline has increased the cost of producing gasoline. Explain how this affects the market for gasoline.

c) Google’s Android operating system for mobile phones has become extremely popular. Explain how this affects the market for mobile phones running Windows Phone.

d) A change in technology has allowed salmon to be grown cheaply on “farms” rather than having to be caught. Explain how this affects the market for salmon.

e) Assume this past summer had been considerably cooler than normal. Explain how this would affect the market for air conditioners.

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