Discuss the immediate effects of the following events ondemand or supply in each

Question

Discuss the immediate effects of the following events ondemand or supply in each respective market. Assume eachmarket is perfectly competitive. Indicate if you think demandor supply will shift right or left. Discuss how any shift indemand or supply will affect the market price.
If you believe the events will cause a shift in either thedemand or supply schedule, indicate which variable caused the shiftin demand or supply.

     Market                                                                                        Event
a.     Airline SecurityGuards                                                          Terrorist attack on U.S.

b.    Wal - MartStock                                     The company expects profits to decrease in the future.

c.    Yen                                                           Japanese products become more attractive.

d.     UsedCars                            Major manufacturers introduce zero percent financing on newcars

Explanation / Answer

A. A terrorist attack on the US would raise demand for airlinesecurity guards because the government will try to hire more ofthem to stop terrorists. The demand would shift to the right. B. The demand for Wal-Mart stock will fall because investorswould find it less attractive given the lowered prospects forprofits. The demand curve would shift to the left. C. The demand for the Yen should raise because people wouldwant more of it to purchase Japanese goods. The demand curve wouldshift to the right. D. The demand for used cars would decrease since newer carsare cheaper due to the easier financing rules. The demand for usedcars would shift to the left.

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