For each of the following, explain whether quantity demanded changes because of a demand shift or a price change, and draw a diagram to illustrate your answer: As a result of increased military spending, the price of Army boots rises. Fish prices fall after the pope allows Catholics to eat meat on Friday. An increase in gasoline taxes lowers the consumption of gasoline. After the Black Death struck Europe in the fourteenth century, wages rose

For each of the following changes in the market for apples, explain why demand will increase, decrease, or remain unchanged. The price of peanut butter (a complement) increases. Consumer incomes increase (and apples are a normal good). It is confirmed scientifically that an apple a day DOES keep the doctor away. The price of apples decreases. A disease affecting apple trees causes people to expect that there will be no apples next year.

Over the past 20 years, the average price of avocados has more than doubled. Assume that the price of avocados is determined by the forces of supply and demand.  Using concepts that you have learned about supply and demand, explain whether the following is or is not a cause of the increase in price of avocado.   Restrictions on imports of avocados from Mexico were gradually lifted. Improved production methods allowed for slower ripening of avocados and therefore more avocados can be reliably shipped. Mexican food, which regularly features avocados, has become more popular.

The following is an excerpt from an article in the Singaporean newspaper, the Straits Times: Singaporeans with a sweet tooth could soon find themselves paying more for their favourite treats, as bakers and confectioners buckle under soaring sugar prices. Since March last year, the price of white sugar has shot up by 70 per cent, according to the New York Board of Trade. As if that didn’t make life difficult enough for bakers, butter and cheese prices have also risen, by 31 per cent and 17 per cent respectively. The increases have been caused by various factors: a steep drop in Thailand’s sugarcane production due to drought, higher sea freight charges, increasing demand from China’s consumers for dairy products and the strong Australian and New Zealand dollar. For the consumer in Singapore, what this may eventually boil down to is a more expensive bag of cookies, with prices at some bakeries expected to rise between 10 and 20 per cent. [The owner of a Singapore…