Table 1 Change in Non- own price Determinants of Demand

No 1 Product Margarine Headline Researchers found that eating too much margarine will lead to cancer Change in Variable Taste and Preferences Diagram Explanation The original equilibrium price and quantity is P0 and Q0 respectively. The discovery that eating too much margarine will lead cancer may cause an unfavourable change in the taste and preferences for margarine, and hence, decreasing the demand for margarine, ceteris paribus. The demand curve shifts leftwards from D to D1. At P0, quantity supplied is greater than quantity demanded. There is a surplus and this results in a downward pressure on price. Price of margarine continues to fall until it reaches the new equilibrium. Overall, equilibrium price decreases from P0 to P1 and equilibrium quantity decreases from Q0 to Q1.

Movie ticket

Average wages decline for workers around the country

Income

The original equilibrium price and quantity is P0 and Q0 respectively. The decline in averages wages for workers around the country would lead to a decline in the income level. As movies are normal goods, a decline in the income level may decrease the demand for movie tickets, ceteris paribus. The demand curve shifts leftwards from D to D1. At P0, quantity supplied is greater than quantity demanded. There is a surplus and this results in a downward pressure on price. Price of movie tickets continues to fall until it reaches the new equilibrium. Overall, equilibrium price decreases from P0 to P1 and equilibrium quantity decreases from Q0 to Q1.

Video Game

Analysts predict video game prices to increase next year

Expectation of future prices

The original equilibrium price and quantity is P0 and Q0 respectively. Due to the analysts prediction, consumers would expect an increase in video game prices next year. To avoid paying higher prices in the future, consumers are likely to increase their demand for video games now , ceteris paribus. The demand curve shifts rightwards from D to D1. At P0, quantity demanded is greater than quantity supplied. There is a shortage and this results in an upward pressure on price. Price of video games continues to rise until it reaches the new equilibrium. Overall, equilibrium price increases from P0 to P1 and equilibrium quantity increases from Q0 to Q1. The original equilibrium price and quantity is P0 and Q0 respectively. Skyrocketing prices of fresh mangosteen may lead to a fall in quantity demanded of mangosteen. As kiwi and mangosteen are substitutes, an increase in the price of a mangosteen is likely to result in an increase in the demand for kiwi, ceteris paribus. The demand curve shifts rightwards from D to D1. At P0, quantity demanded is greater than quantity supplied. There is a shortage and this results in an upward pressure on price. Price of kiwi continues to rise until it reaches the new equilibrium. Overall, equilibrium price increases from P0 to P1 and equilibrium quantity increases from Q0 to Q1. The original equilibrium price and quantity is P0 and Q0 respectively. To encourage couples to give birth, the government is increasing support for parents significantly. This government policy is likely to increase in demand for baby strollers, ceteris paribus. The demand curve shifts rightwards from D to D1. At P0, quantity demanded is greater than quantity supplied. There is a shortage and this results in an upward pressure on price. Price of baby strollers continues to rise until it reaches the new equilibrium. Overall, equilibrium price increases from P0 to P1 and equilibrium quantity increases from Q0 to Q1.

Kiwi Fruit

Price of fresh mangosteen skyrocket

Price of a related good.

Baby Strollers

Big increase in government support for parents

Government policies

Ice cream

Ice cream treats to cool down as heat wave rolls on

Weather

The original equilibrium price and quantity is P0 and Q0 respectively. As the heat waves rolls on, the hot weather is likely to increase the demand for ice cream as it can help people to cool down, ceteris paribus. The demand curve shifts rightwards from D to D1. At P0, quantity demanded is greater than quantity supplied. There is a shortage and this results in an upward pressure on price. Price of ice cream continues to rise until it reaches the new equilibrium. Overall, equilibrium price increases from P0 to P1 and equilibrium quantity increases from Q0 to Q1. The original equilibrium price and quantity is P0 and Q0 respectively. The ageing population puts pressure on emergency care and this change in population structure is likely to increase the demand for healthcare services, ceteris paribus. The demand curve shifts rightwards from D to D1. At P0, quantity demanded is greater than quantity supplied. There is a shortage and this results in an upward pressure on price. Price of healthcare continues to rise until it reaches the new equilibrium. Overall, equilibrium price increases from P0 to P1 and equilibrium quantity increases from Q0 to Q1. The original equilibrium price and quantity is P0 and Q0 respectively. With rising tensions on the Korean peninsula, people fear that war may break out between the two countries and are afraid to travel to South Korea. Thus, the demand for holiday to Korea is likely to decrease, ceteris paribus. The demand curve shifts leftwards from D to D1. At P0, quantity supplied is greater than quantity demanded. There is a surplus and this results in a downward pressure on price. Price of holiday to Korea continues to fall until it reaches the new equilibrium. Overall, equilibrium price decreases from P0 to P1 and equilibrium quantity decreases from Q0 to Q1.

Healthcare services

Ageing population puts pressure on emergency care

Population

Holiday to Korea

Taiwan warns on travel to South Korea due to rising tensions on the Korean peninsula

Miscellaneous Rising tensions between North and South Korea

Table 2 Change in Non- own price Determinants of Supply

No 1 Product Frozen peach pies Headline Good weather brings record peach harvest Change in Variable Weather Diagram Explanation The original equilibrium price and quantity is P0 and Q0 respectively. The good weather brought record peach harvest, and this is likely to increase the supply of frozen peach pies, ceteris paribus. The supply curve shifts rightwards from S to S1. At P0, quantity supplied is greater than quantity demanded. There is a surplus and this results in a downward pressure on price. Price of frozen peach pies continues to fall until it reaches the new equilibrium. Overall, equilibrium price decreases from P0 to P1 and equilibrium quantity increases from Q0 to Q1. The original equilibrium price and quantity is P0 and Q0 respectively. Due to an increase in the number of firms when Starbucks and Coffee Bean enter the Indian coffee market, the supply of coffee rises, ceteris paribus. The supply curve shifts rightwards from S to S1. At P0, quantity supplied is greater than quantity demanded. There is a surplus and this results in a downward pressure on price. Price of coffee continues to fall until it reaches the new equilibrium. Overall, equilibrium price decreases from P0 to P1 and equilibrium quantity increases from Q0 to Q1.

Coffee

Starbucks and Coffee bean enter India market

Number of firms

Fish

Fuel bill of UK fishing fleet hits 'all-time high'

Cost of factors of production

The original equilibrium price and quantity is P0 and Q0 respectively. The increase in the fuel bill of UK fishing fleet will lead to an increase in the cost of production for the fishermen. This may result in a fall in the supply of fish, ceteris paribus. The supply curve shifts leftwards from S to S1. At P0, quantity demanded is greater than quantity supplied. There is a shortage and this results in an upward pressure on price. Price of fish continues to rise until it reaches the new equilibrium. Overall, equilibrium price increases from P0 to P1 and equilibrium quantity decreases from Q0 to Q1. The original equilibrium price and quantity is P0 and Q0 respectively. As more companies expect higher steel prices in the future, they may decrease their supply of steel now to accumulate stocks and sell when prices rise in the future. This will enable firms to reap higher profits. Hence, the current supply of steel falls, causing supply curve to shift leftwards from S to S1, ceteris paribus. At P0, quantity demanded is greater than quantity supplied. There is a shortage and this results in an upward pressure on price. Price of steel continues to rise until it reaches the new equilibrium. Overall, equilibrium price increases from P0 to P1 and equilibrium quantity decreases from Q0 to Q1. The original equilibrium price and quantity is P0 and Q0 respectively. The cut in subsidy for P&K fertilisers will increase the cost of production for maize farmers. This government policy is likely to reduce the supply of maize, ceteris paribus. The supply curve shifts leftwards from S to S1. At P0, quantity demanded is greater than quantity supplied. There is a shortage and this results in an upward pressure on price. Price of maize continues to rise until it reaches the new equilibrium. Overall, equilibrium price increases from P0 to P1 and equilibrium quantity decreases from Q0 to Q1.

Steel

More companies expect higher steel prices

Expectation of future prices

Maize

Cabinet nod for subsidy cut in P&K fertilizers

Government policies

Food-grains

Rise in the price of biofuel (biofuel can be produced out of grains)

Price of other goods and services

The original equilibrium price and quantity is P0 and Q0 respectively. The rise in the price of biofuel provides an incentive for producers to increase the quantity of biofuel supplied. This is likely to decrease the supply of food-grains as biofuels and food-grains are in competitive supply, ceteris paribus. The supply curve shifts leftwards from S to S1. At P0, quantity demanded is greater than quantity supplied. There is a shortage and this results in an upward pressure on price. Price of food-grains continues to rise until it reaches the new equilibrium. Overall, equilibrium price increases from P0 to P1 and equilibrium quantity decreases from Q0 to Q1. The original equilibrium price and quantity is P0 and Q0 respectively. The bird flu epidemic has led to a ban on poultry products from China, including dried duck feathers, which are used in the production of shuttlecocks. This is likely to cause a decrease in the supply of shuttlecocks, ceteris paribus. The supply curve shifts leftwards from S to S1. At P0, quantity demanded is greater than quantity supplied. There is a shortage and this results in an upward pressure on price. Price of shuttlecock continues to rise until it reaches the new equilibrium. Overall, equilibrium price increases from P0 to P1 and equilibrium quantity decreases from Q0 to Q1. The original equilibrium price and quantity is P0 and Q0 respectively. As Starbucks seek to accelerate growth in Southeast Asia, the supply of Starbucks coffee is likely to increase, ceteris paribus. The supply curve shifts rightwards from S to S1. At P0, quantity supplied is greater than quantity demanded. There is a surplus and this results in a downward pressure on price. Price of Starbucks coffee continues to fall until it reaches the new equilibrium. Overall, equilibrium price decreases from P0 to P1 and equilibrium quantity increases from Q0 to Q1.

Shuttlecock

Indonesia fears shuttlecock shortage due to bird flu

OthersEpidemic

Starbucks coffee

Starbucks continues to accelerate growth in Southeast Asia

Objectives of firm

Cars

Robots make automobile assembly faster, cheaper

Technology

The original equilibrium price and quantity is P0 and Q0 respectively. Technological advancements have led to the invention of robots, which make automobile assembly faster and cheaper. This lowers the cost of producing cars and hence, the supply of cars is likely to increase, ceteris paribus. The supply curve shifts rightwards from S to S1. At P0, quantity supplied is greater than quantity demanded. There is a surplus and this results in a downward pressure on price. Price of cars continues to fall until it reaches the new equilibrium. Overall, equilibrium price decreases from P0 to P1 and equilibrium quantity increases from Q0 to Q1.

Table 3 Change in Non- own price Determinants of Demand

No 1 Product Food-grains (assumed to be normal goods) Circumstance Rise in price of biofuel and an increase in income level (biofuel can be produced out of grains) Diagram Explanation The original equilibrium price and quantity is P0 and Q0 respectively. The rise in the price of biofuel provides an incentive for producers to increase the quantity of biofuel supplied. This is likely to decrease the supply of food-grains as biofuels and food-grains are in competitive supply, ceteris paribus. At the same time, as food-grain is a normal good, an increase in income level will likely lead to an increase in the demand for food-grains, ceteris paribus. This will cause the supply curve to shift leftwards from S to S1 and the demand curve to shift rightwards from D to D1. When demand increases and supply decreases at the same time, price will definitely rise but the effect on quantity is indeterminate. In the case where the decrease in supply is greater than the increase in demand , equilibrium price increases from P0 to P1 and equilibrium quantity decreases from Q0 to Q1.

Easter Egg

Political unrest in the Ivory Coast, the worlds biggest supplier of cocoa, and it is five weeks to Easter.

The original equilibrium price and quantity is P0 and Q0 respectively. As the Easter season is nearing, there will be a favourable change in taste and preferences towards easter eggs, hence, increasing the demand for easter eggs, ceteris paribus. At the same time, political unrest in the Ivory Coast, the worlds biggest supplier of cocoa (a key ingredient of producing easter eggs), will lead to a decrease in the supply of easter eggs, ceteris paribus. This will therefore cause the supply curve to shift leftwards from S to S1 and the demand curve to shift rightwards from D to D1. When demand increases and supply decreases at the same time, price will definitely rise but the effect on quantity is indeterminate. In the case where the decrease in supply is greater than the increase in demand , equilibrium price increases from P0 to P1 and equilibrium quantity decreases from Q0 to Q1. The continuous political unrest may support the decrease in supply of cocoa and therefore the change in supply may be stronger than the change in demand. The increase in demand of easter eggs may be temporary.

Cigarette

Success in antismoking campaign. Meanwhile, the government has imposed higher tax on cigarettes.

Success in anti-smoking campaign will lead to an unfavourable change in taste and preferences towards smoking, hence, decreasing the demand for cigarettes, ceteris paribus. At the same time, the governments policy to impose higher tax on cigarettes will increase the cost of supplying cigarettes and hence, may lower the supply of cigarettes, ceteris paribus. As a result, the supply curve shifts leftwards from S to S1 and the demand curve shifts leftwards from D to D1. When both demand and supply decrease at the same time, quantity will definitely decrease but the effect on price is indeterminate. In the case where the decrease in supply is greater than the decrease in demand, equilibrium price increases from P0 to P1 and equilibrium quantity decreases from Q0 to Q1.

Flu vaccination

Number of deaths from bird flu increasing. Government has announced a subsidy to aid in production of the flu vaccine.

The increasing number of deaths from bird flu will lead to a favourable change in taste and preferences towards flu vaccination and hence, increase the demand for flu vaccination, ceteris paribus. At the same time, the government policy to subsidise the production of the flu vaccine will lower the cost of producing the vaccine and cause supply to increase, ceteris paribus. As a result, the supply curve shifts rightwards from S to S1 and the demand curve also shifts rightwards from D to D1. When both demand and supply increase at the same time, quantity will definitely rise but the effect on price is indeterminate. In the case where the increase in supply is equal to the increase in demand, equilibrium price remains the same while equilibrium quantity increases from Q0 to Q1.

Silly bandz

Silly bandz are the latest schoolyard craze. Producers of silly bandz have promised consumers that prices will stay constant at $5 per packet.

The silly bandz craze led to a favourable change in taste and preferences towards silly bandz and hence, an increase in demand, ceteris paribus. At the same time, as the producers seek to keep prices of silly bandz affordable for consumers at $5 per packet, supply of silly bandz will increase to meet the increase in demand, ceteris paribus. As a result, the demand curve shifts rightwards from D to D1 and the supply curve also shifts rightwards from S to S1. When both demand and supply increase at the same time, quantity will definitely rise but the effect on price is indeterminate. In this case, the increase in supply is equal to the increase in demand such that the equilibrium price remains constant at $5. Equilibrium quantity increases from Q0 to Q1.