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    Supply and Demand Curves for SUVs, Housing, and Air Travel

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    Can you help me with the following five scenarios? Please draw a separate diagram to demonstrate the answer, and describe what happens to equilibrium price and sales, explaining why or why not this makes sense in the real world (Hint: Remember the difference in a change in demand [supply] and a change in quantity demanded [supplied]. Don't shift both curves unless appropriate).

    A. Show the effect on the U.S. new construction residential housing market in the event of a severe economic recession.
    B. Show the effect on the U.S. air travel market if American Airlines unexpectedly folds (ceases operations) overnight.
    C. Show the effect on the U.S. domestic car market if the price of foreign cars increases due to an exchange rate shock.
    D. Show the effect on the market for large SUVs if the price of gasoline in the U.S. comes to rest at greater than $4 per gallon.
    E. Show the effect of setting the price of Super Bowl tickets at a price lower than equilibrium price.

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    Solution Preview

    Please see the attached file for a detailed illustration of all five scenarios.

    A. During a severe economic recession, consumers will focus on basic needs. This will dampen demand for residential units. The effect is denoted by a leftward shift of the demand curve indication a reduction the demand. The result will be a decline in the price of residential units from Price 1 to Price 2.

    B. ...

    Solution Summary

    The solution shows the interplay of supply and demand for housing, land and air travel. This solution is 582 words and contains graphs and diagrams to help the student understand in an attached 4-page Word document.