Real world examples

Question 1

Shifts in demand

Answer 1

Price of substitutes - During the 1980s, there was a battle between Coca-Cola and PepsiCo for dominance

Change in Income for inferior goods - Walmart had a 20% 1 year-total return in the 2008 recession due to the fact that they sell inferior, low production cost goods

Trend taste preferences and seasonal - In 2016, the demand for fidget spinners surged. But slowly died down later around June 2017

Question 2

Shifts in supply

Answer 2

Supply shock - In 2017, the prices for nuts in Brazil skyrocketed due to lack of rain in South American for the last few years, causing the supply of nuts to fall.

New technology - in the 1960s, a major scientific effort nicknamed the Green Revolution focused on breeding improved seeds for basic crops like wheat and rice.

Natural conditions - In 2014, the Manchurian Plain in Northeastern China—which produces most of the country’s wheat, corn, and soybeans—experienced its most severe drought in 50 years

Question 3

Subsidies

Answer 3

Indian government subsidizes solar projects to achieve its 100 GW solar target by 2022.

US has Subsidies for farmers averaged $16 billion per year over the past decade

Question 4

Taxes

Answer 4

the U.S. government imposes a tax on alcoholic beverages that collects about $8 billion per year from producers

Hong kong government increase of HK$4 on each pack of cigarettes – from HK$34 to HK$38

Question 5

Inelastic demand

Answer 5

Inelastic - In August 2018, petrol prices in Mumbai, India rose to 85.93 rupees a litre, however, as there were not many alternatives to petrol in the market, the quantity demanded didn’t change substantially.

Question 6

Elastic demand

Answer 6

The prices of the new iPhone XR set in Japan have been high (luxury product) which has led to a sharp fall in sales in the year 2018 for the flagship smartphone. (2018)

In November 2018, Panasonic, Godrej, and Haier have raised prices for refrigerators, televisions and other appliances which has led to a fall in demand.

Question 7

Minimum wage

Answer 7

In 2019, the minimum wage hk$37.5, honks long only renews it every 2years

Question 8

Positive consumption exteranlity

Answer 8

9 year schooling was made mandatory in 1993