Whether the issue is the price of a gallon of milk, the cost of housing, or the stock price of a Fortune 500 corporation, market prices are a central subject of study in microeconomics. Prices in product markets make up a constellation of information about what is happening in a capitalist economyand ultimately about how markets connect individuals to each other, as well as to society more generally. How prices are determined has been a focus of economists since even before Adam Smith.

Ultimately, any theory of how markets and market prices work is an explanation of the ways that an economy functions and the broader social, historical, and moral implications thereof. Among these broader implications are the allocation of resources, the efficiency of production, the distribution of income and inequality, the desirability of competition, and the exercise of power.

Purpose

Explains the underlying causes of a price change for a product of your choosing. Formulating an explanation for the price change in terms of underlying causes will help to understand:

how economists apply their models, concepts, and logic to explain real-world phenomena; and what those models, concepts, and logic imply about how the market system works and how it fits into society more generally.

Introduction

To begin the research, choose a product that has seen a change in price over a period of time. The selection product should be at the market level rather than an individual brand within that market. For example, the product of "smart phones" but not the iPhone 10. Report on the underlying causes and effects of that change in price.

For instance, the report might explain the rising price of college textbooks, housing, or certain medical treatments. Or it could address the important determinants of the price of a gallon of gasoline or a cell phone plan.

Step 1: Conduct Research and Gather References

Find at least two sources from reputable publicationsfor instance, the Financial Times or other news services, academic journals, or booksthat address the underlying causes of a price change in a product. Both articles should be about the same product and price change. Cite these sources in your responses to the questions below and include them in the reference section titled "References" at the end of the report.

Step 2: Write the Report

The report will be organized into five sections. A separate introduction section is not required. The first four sections will correspond to the four questions below. The responses to these questions may include graphical images (for instance, a supply and demand market model), but this is not a requirement.

Question 1 - Defining the Product and its Change in Price

What product or occupation have you chosen and how has its price changedfor instance, by how much and over what time period?

The response here should clearly explain the product, by how much its price has changed, and over what time period (for instance, 'the price has increased by $2.50 since 2009', or 'the price fell by 20% between August and October'). You may include an image charting the price change through time, but this is not required. If you copy a chart from another source, be sure to cite that source.

Question 2 - The Impact of the Price Change

What has been the impact of this price change on individuals and on society as a whole? That is, who has benefited and who has been hurt, and how do our own values or the values of others affect the interpretation of this impact?

The response here should address diversity of human experience in relation to the product and the impact of the price change. Before writing your response, you may want to ask yourself:

• How does this product and its changing price help us to understand the way people are interconnectedeconomically, historically, and socially?
• How are different groups of people affected differently by this price changewho gains and who loses?

Question 3 - Explaining the Price Change

What is/are the most important direct cause or causes of this price change?

The response here should include at least one (and potentially all three) of the following categories:

• Demand-side explanations: for example, changes in income and preferences among buyers of the product, or changes in the availability or price of substitutes for the product.
• Supply-side explanations: for example, price competition or lack thereof, investments and changes in the markup (corporate levy), or technological improvements.
• Governance explanations: for example, taxes and subsidies, government regulations and law, changes in market and corporate governance norms.

Question 4 - Underlying Social and Historical Causes

With regard to the cause or causes of the price change described in Question 3, what are the underlying social and historical causes of those changes?

The response here should contextualize your response in Question 3, explaining the broader circumstances that led to the change or changes that directly caused the price of your product to increase or decrease. For instance, if in Question 3 you explained the price change as a result of increased demand, in this question you might explain the cultural, historical, or legal changes that ultimately caused the increase in demand.

Step 3: Create the References Page

The fifth section of your report will be your "References" section.