2 Indicate whether each of the following statements describe

2.   Indicate whether each of the following statements describes an increase in demand, decrease in demand, change in quantity demanded, increase in supply, decrease in supply, or change in quantity supplied in the given market.

a.   Store-brand soup prices are cut, reducing sales of Campbell’s soup. Market: Campbell’s soup.

b. Coffee bean prices hit an 18-month low following a bountiful harvest. Market: coffee beans.

c.   A summer heat wave leads to higher prices for bottled water. Market: bottled water.

d.   Holiday clothing discounts boost clothing sales. Market: clothing.

e.   Apple introduces a tinier and more powerful iPod model. Market: older iPod models.

Solution

a.) Reduction in prices of store brand soup leads to decrease in supply of Campbell’s soup.

b.)Reduction in coffee bean prices leads to lead to increase in quantity demanded of coffee beans because quantity demanded is a negative function of price.

c.)Rise in prices of bottled water lead to decrease in quantity demanded for bottled water.

d.) Holiday clothing discounts leads to increase in sales which leads to increase in supply of clothing.

e.) Apple introduces a tinier and more powerful iPod model.So there will be decrease in demand for older iPod models.

So only when price of a good changes,then quantity demanded or quantity supplied changes.

When other factors or other good\'s prices changes,demand or supply changes.