Question

part c. directions: read the scenarios below for various products in the market, and:

1. determine if the quantity supplied changed (which means only the price of the goods has changed),

or if the entire supply has changed.

1. if only the quantity supplied changed, circle

o change.\ if the entire supply has changed, identify
if it was an increase or decrease.

1. identify which determinant of supply caused the change.
2. graph the change as either a shift or a movement. be specific when naming the

determinant. label the new supply curve.

1. a company that produces smartphones adopts a new automated production machine that reduces

labor costs and increases output speed. what happens to the supply of smartphones?
change in quantity supplied
change in supply
increase
decrease
no change
determinant:

1. the price of steel, a key input for car manufacturers, increases sharply due to global supply chain

disruptions. what happens to the supply of cars?
change in quantity supplied
change in supply
increase
decrease
no change
determinant:

1. orange farmers decide to grow more oranges because the current market price has increased.

what happens to the supply of oranges?
change in quantity supplied
change in supply
increase
decrease
no change
determinant:

1. a boot manufacturer decides to build a new factory and hire more workers to meet the growing

demand for its designer cowboy boots. what happens to the supply of cowboy boots?
change in quantity supplied
change in supply
increase
decrease
no change
determinant:

Explanation:

1. Change in Supply - Increase: The new automated production machine reduces labor costs (a determinant of supply - cost of production). This leads to an increase in supply. The supply curve shifts to the right (labeled \(S1\)).
2. Change in Supply - Decrease: The increase in the price of steel (an input cost, a determinant of supply - cost of production) makes car production more expensive. So, the supply of cars decreases. The supply curve shifts to the left (labeled \(S1\)).
3. Change in Quantity Supplied - Increase: When the market price of oranges increases, according to the law of supply (quantity supplied is positively related to price), there is a movement along the supply curve (an increase in quantity supplied). There is no shift in the supply curve (so no change in supply determinants like cost of production, technology etc. are involved here as per the scenario).
4. Change in Supply - Increase: Building a new factory and hiring more workers (an increase in the number of producers/firms, a determinant of supply) to meet demand will increase the supply of cowboy boots. The supply curve shifts to the right (labeled \(S1\)).

Answer:

1. Change in Supply - Increase; Determinant: Cost of production (reduction in labor costs due to technology)
2. Change in Supply - Decrease; Determinant: Cost of production (increase in input - steel price)
3. Change in Quantity Supplied - Increase; Determinant: (No change in supply determinants as it is a movement along the curve due to price change)
4. Change in Supply - Increase; Determinant: Number of producers (expansion of production capacity)