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Supply and Demand Curve

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Part 1) do the following cause an upward or downward movement along a given demand (or supply) curve, or instead involves an outward or inward shift in the relevant demand (or supply) curve for the product in question.

part 2) How will they impact the market equilibrium price and quantity change from the original equilibrium? (In the short-run only).

a) The coal market: The costs of producing coal resources rise as the resources are depleted and it becomes harder to extract the coal deposits from the earth.

b) The wheat market: Due to floods in the Midwest, half of the wheat crop in the United States is destroyed. At the same time, the price of oats (a substitute for wheat) decreases due to a sharp rise in the number of farmers growing oats in response to consumer demand for health food.

c) The orange market: There is a drought in the orange orchards of Florida.

d) The motorcycle market: There is a decrease in the average price of new motorcycles.

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Solution Summary

Supply and Demand Curves are evaluated.

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a) The coal market: The costs of producing coal resources rise as the resources are depleted and it becomes harder to extract the coal deposits from the earth.
This means that the supply of coal goes down. Therefore, the supply curve shifts towards the left, indicating that for the same price level, lower amount of coal is available. This will push the cost of coal up in the market in the short run. However, in the long run, people will come up with alternative sources ...

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