Econ Chapter 3 Activity - Courtney Vogel

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Wisconsin Indianhead Technical College *

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V001

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Economics

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Jan 9, 2024

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*Chapter 3 Activity Part 1: Fill in the blanks 1) _______ Demand _____ is the willingness and ability of buyers to buy different quantities of a good at different prices. 2) According to the law of demand, the price and the quantity demanded of a good are ___ Not _________ related. 3) __ Supply __________ is the willingness and ability of sellers to sell different quantities of a good at different prices. 4) An increase in the cost of production will cause a(n) _ Shortage ___________ in supply. 5) A _ Surplus ___________ is when quantity supplied exceeds quantity demanded. Part 2: List 4 factors that can shift the Demand Curve: 1) ___ Tastes __________________________________ 2) Income_____________________________________ 3) __ Other Goods ___________________________________ 4) Expectations _____________________________________ Part 3: List 4 factors that can shift the Supply Curve: 1) _ Technology ____________________________________ 2) Taxes and Subsidies _____________________________________ 3) _ Factor Costs ____________________________________ 4) Expectations _____________________________________ Part 4: Complete the following chart by stating whether each measure increases or decreases: De Shift Price Quantity Demand Increases Increases Decreases Demand Decreases Decreases Decreases Supply Increases Decreases Decreases Supply Decreases Increases Decreases Part 5: Economics in the Headlines Process: Read the summaries on the following two pages of articles from MSNBC news, keeping in mind the factors that will change demand or supply for a product. Then answer the questions below.

“McDonald's Uses Dolls to Woo Girls” (summary of MSNBC news online report) For three weeks in April, McDonald's Corporation incorporated miniature Madame Alexander dolls as toys in the Happy Meals sold to girls. Madame Alexander dolls are collected internationally and are known for their high quality. The Director of Marketing for McDonald's explained that while young boys and girls eat at McDonald's in comparable numbers, by the ages of 11-12, girls become more weight-conscious and make different food choices, which tend to continue into adulthood. McDonald's hoped that by introducing the dolls, more girls would be enticed to eat at McDonald's, increasing the company's customer base long into the future. 1. Is McDonald’s attempting to change the demand for or the supply of Happy Meals? Is McDonald’s trying to increase it or decrease it? McDonald’s is trying to change the demand for Happy Meals by increasing it. 2. Use the supply and demand curves provided to illustrate the change McDonald’s is trying to make. 3. If McDonald’s is successful in making this change to attract and keep female customers in the long run, what do you expect to happen to the quantity of Happy Meals produced? What do you think will eventually happen to the price? The Price of Happy Meals will Increase causing the Quantity to decrease. D 2

"Iran Urges Oil Embargo" (summary of CNN news online report) In early April, Iranian leader Ayatolla Ali Khamenei called on leaders of OPEC nations to place a one-month embargo on oil sold to Western nations. Khamenei said that by cutting off oil, the US and other Western nations would be punished for their support of Israel in the Israeli-Palestinian conflict. Iran is the second-largest producer of oil in the Middle East, and an oil embargo similar to the one OPEC carried out in 1973 could have serious ramifications for economies around the globe. 1. Is Iran attempting to change the demand for or the supply of oil in Western nations? Is Iran trying to increase it or decrease it? Iran is attempting to change the supply of oil in western nations by decreasing it. 2. Use the supply and demand curves provided to illustrate the change Iran is trying to make. 3. If Iran is successful in convincing oil-producing nations to cut off the supply of oil to Western nations, what do you expect to happen to the quantity of oil available in those nations? What do you think will happen to the price? The Quantity of oil available will decrease causing price to increase. S 2

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