Written essay #1: Supply and Demand Article

Purpose

This assignment is an excellent way to apply the supply and demand framework in a real-life situation beyond the textbook examples and cases.

Instructions

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.

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.

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.

3.Draw a supply-and-demand graph to explain this change. Be sure to label your graph and clearly indicate which curve shifts.

Helpful notes:

Markets for ordinary goods and services are most easily analyzed.

Avoid advertisements because they contain little information.

Be cautious with commodity and financial markets unless you have a very good understanding of the particular market.

Most changes will only shift one curve - either supply or demand - not both.