For the following questions, you need to determine whether each of the four fact

Question

For the following questions, you need to determine whether each of the four factors given creates a positive demand shock, a negative demand shock, a positive supply shock, or a negative supply shock for the market in bold. For example, if you are told, “Automobile workers receive higher wages: automobiles,” you would indicate that the supply of automobiles will decrease and the supply curve will shift to the left.

1st attempt

Part 1   (1 point)(1 pt)

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ABirth rates in the United States decline: diapers

BThe government provides subsidies to ethanol producers: ethanol

CStarbucks coffee drinkers suffer due to a small coffee harvest: Starbucks coffee

DConsumer incomes decrease: public transportation

Part 2   (1 point)(1 pt)

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AThe price of beer increases: Solo cups

BHenry Ford develops assembly-line production: automobiles

CNatural gas producers are making large economic losses: natural gas

DThe price of PlayStation increases: Xbox

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Explanation / Answer

Part 1.

A. Negative demand shock- The decline in the buirth rate means a few people in the future so it will neagtively affect the demand for the goods and services and the demand curve shifts to the left.

B. Positive supply shock- the subsidy wil cover the cost of production of the producers so they can produce more, the supply curve will shifts to the right.

C. Negative supply shock- the bad harvest decrease the supply of the coffee and the supply curve will shift to the left.

D. Positive demand shock- When the income decreases more people will prefer the public transportation system and that is a increase in the demand and the demand curve shifts to the right.

PART 2.

A. Neagative demand shock- The solo cup and the beer are complementary goods so when the price of beer increases the demand for the solo cups decreases.

B. positive supply shock- the supply increases and the supply curve shifts right.

C. Negative supply shock- When they face economic loss they would obviously cut the production, the supply curve shifts to the left.

D. Positive demand shock-

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