Chapter 6, Problem 2CYU

a)

To determine

The question requires us to determine how the supply curve will shift in certain situations.

Explanation of Solution

When large quantities of coffee berries get destroyed, the supply of coffee falls due to a fall in the number of raw materials and causes the supply curve to shift.

Thus, the supply curve will shift to the left.

Economics Concept Introduction

Any change in supply will shift the supply curve while any change in quantity supplied will cause the movement along the supply curve.

The supply of a commodity will change due to the following reasons:

• Change in price of relative goods (substitutes and complementary products)
• Change in technology
• Change in input prices
• Change in expectations
• Change in the number of producers

Any change in the price of the commodity changes the quantity supplied.

b)

To determine

The question requires us to determine how the supply curve will shift in certain situations.

Explanation of Solution

If consumers demand more helmets, then demand for helmets will increase and thus, increase the price of helmets. Any change in the price of the products doesn’t shift the supply curve because it causes movement along the supply curve. So, the supply curve remains unchanged.

c)

To determine

The question requires us to determine how the supply curve will shift in certain situations.

Explanation of Solution

An increase in the number of producers reflects a higher supply of the product in the market. So, the supply of tea will increase and will cause the supply curve to shift to the right.

d)

To determine

The question requires us to determine how the supply curve will shift in certain situations.

Explanation of Solution

An increase in input prices causes the costs of production to rise and results in lower supply. So, the supply curve will shift to the left.