Find an article in a recent newspaper or magazine illustrating a change in price or quantity in

some market. Analyze the situation using economic reasoning as follows:

1. Has there been an increase or decrease in demand? Factors that could shift the demand

curve include changes in preferences, changes in income, changes in the price of

substitutes or complements, or changes in the number of consumers in the market.

(marks 5)

2. Has there been an increase or decrease in supply? Factors that could shift the supply

curve include changes in costs of materials, wages, or other inputs; changes in

technology; or changes in the number of firms in the market.

(marks 5 )

You have to turn in a copy of the article along with their explanation.

3. Draw a supply-and-demand graph to explain this change. Be sure to label your graph and

clearly indicate which curve shifts.

(10 marks)

Note: Avoid advertisements since they contain little information. You should be wary of commodity and financial markets unless you have a good understanding of the particular market.

Markets for ordinary goods and services are most easily analyzed.

Points for Discussion :

Most changes will only shift one curveeither supply or demandnot both. Remember that

price changes will not cause either curve to shift. (But shifting either curve will change price.)

Equilibrium points are not fixed. They change when supply or demand changes. Prices will not

necessarily return to previous levels nor will quantities.

Also remember about fundamental relations:

1. Increases in demand cause price and quantity to increase.

1. Increases in supply cause price to decrease and quantity to increase.
2. Decreases in demand cause price and quantity to decrease.
3. Decreases in supply cause price to increase and quantity to decrease.