Axia College Material
Appendix A

Answer the following questions.

1. If the price of a good increases, what happens to demand?
The demand decreases because people are not willing to buy as much when the price rises.
2. If the price of a good decreases, what happens to supply?
The supply will increase because people are now willing to buy more at a lower price.
3. Does a change in price create curve shifts? Explain.
Yes because a change in price results in a change in demand and we know that demand determines the price and vice versa.

Complete the following matrix. An example is provided.

|Event |Market affected by event |Shift in supply, demand, or |Change in equilibrium (P&Q) |
| | |both. Explain your answer. | |
|Frozen orange crops in California |Orange juice |Supply (left)—Not as many |Price will increase and |
| | |available oranges to offer |quantity will decrease. |
| | |consumers. | |
|Hurricanes in the Gulf Coast |Gulf Coast tourism |Demand will decrease because no|Price will decrease and |
| | |one wants to go this time of |quantity will increase. |
| | |year | |
|Price of hot dogs increases |Hamburger |Demand will increase |Price increase and quantity |
| | |