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.

Part1:
A. Birth rates in the United States decline: diapers
B. The government provides subsidies to ethanol producers: ethanol
C. Starbucks coffee drinkers suffer due to a small coffee harvest: Starbucks coffee
D. Consumer incomes decrease: public transportation
Part2:
A. The price of beer increases: Solo cups
B. Henry Ford develops assembly-line production: automobiles
C. Natural gas producers are making large economic losses: natural gas
D. The price of PlayStation increases: Xbox

Answer 1

Part1:

A. Birth rates in the United States decline: diapers

• demand decreases, demand curve shifts to the left

B. The government provides subsidies to ethanol producers: ethanol

• supply increases, supply curve shifts to the right

C. Starbucks coffee drinkers suffer due to a small coffee harvest: Starbucks coffee

• supply decreases, supply curve shifts to the left

D. Consumer incomes decrease: public transportation

• demand decreases, demand curve shifts to the left

Part2:

A. The price of beer increases: Solo cups

• demand decreases, quantity demanded will lower following the demand curve

B. Henry Ford develops assembly-line production: automobiles

• supply increases, supply curve shifts to the right

C. Natural gas producers are making large economic losses: natural gas

• supply decreases, supply curve shifts to the left

D. The price of PlayStation increases: Xbox

• demand for Xbox decreases, quantity demanded will lower following the demand curve