Variables typically included in a multivariate demand function (other than the price and quantity of the item the demand function represents) are consumer tastes and preferences, the number of buyers, spendable (disposable) income, prices of substitute goods, prices of complementary goods, advertising expenditures, weather, and expectations.Recalling that the price of the item being considered is placed on the vertical axis, and the quantity on the horizontal axis, the other variables are termed demand shifters.Please answer the following questions about the affect changes in other variables might have on the demand for the item.These changes will either cause demand to increase (shift right) or decrease (shift left).Use either word as applicable, for the short answer.

1.I like to eat something sweet with my afternoon Latte.Chocolate filled cookies and biscotti are two choices that substitute for one another.However the price of chocolate cookies has increased substantially relative to biscotti.This should cause the demand for biscotti to______________ .

2.Donuts and coffee are complementary to one another.If the quantity demanded of coffee decreases, then the demand for donuts is likely to ____________________ .

3.Chicken is generally considered an inferior meat when compared to more expensive T-bone steak.In times of economic recession, when incomes fall and unemployment rises, the demand for chicken should _____________ and for beef should ____________.

4.Headcount is the number of individual students enrolling.Think of this as an indicator of the number of buyers of education.Student Credit Hours (SCH) is the number of credit hours the students enroll in.Think of this as an indicator of the quantity of education demanded.Suppose that the headcount has decreased for the past five years.One should not be too surprised therefore toobserve that Student Credit Hour production _____________ .

5.Students and faculty complement one another.When student head count declines substantially, the demand for faculty ____________ .

Variables typically included in a multivariate supply function (other than the price and quantity of the item the supply function represents) are prices of other goods that use similar input resources for production, expectations, the number of suppliers, techniques of production, taxes and subsidies, prices of input resources, and weather.Please answer the following questions about the affect changes in other variables might have on the supply of the item.These changes will either cause supply to increase (shift right) or decrease (shift left).Use either word as applicable, for the short answer.

1.The minimum wage rate will probably be substantially increased in the next couple of years.Labor is an input resource for production.If there are no cheaper substitutes forlabor, then producers are likely to ___________ the supply of the item it produces assuming there is no increase in the money spent on the production of it.

2.Productivity is a key variable in the supply of items.An increase in productivity of a resource should translate into an ___________ in the supply of the item it produces.

3.We are taxing the production of "real gas" (gasoline containing no ethanol) and using the tax revenue generated to subsidize production of ethanol (added to gas to reduce the need for gasoline in the mixture).In supply terms, we are trying to ____________ the supply of "real gas" and _____________ the supply of ethanol-fortified gas.

4.New products deemed desirable by the buying public are at first very profitable to manufacture (think about the original Apple iPhone).Their profitability attracts competition, which ______________ the supply of the product.The increased number of competitors, over time, squeezes out excess profits and reduces product profitability.As this happens suppliers ______________ the supply of the product (as they find new more profitable ventures to shift to).This is a brief description of the role of profit in a free market economy.

5.If you wish to _______________ the supply of a good, then tax it.