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61
Activity 6.
Analyzing Market Variables
I. Each of the events listed below will affect the market for par-
ticular goods or services. Working with a partner, match the letter of
the "effect" (A–D) with the events listed (a–d).
A. Supply will increase
B. Supply will decrease
C. Demand will increase
D. Demand will decrease
a. Cost of obtaining oil for making plastics decreases.
b. The yo-yo fad comes to an end.
c. An advertising campaign for basketball shoes is effective.
d. Personal income tax increase reduces available income for
purchasing stereos, TV's and other major appliances.
e. Government subsidy helps local carpet manufacturers.
f. New robots lower production costs for automobiles.
g. Drought ruins the rice crop.
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II. Predicting the effect of price increase on market demand.
You learned that the demand for a product or service is described
as elastic if a price increase results in a drop in sales. A product or service
has inelastic demand when a change in price has no effect upon sales.
Look at the list of consumer goods and services below. In the
blank on the left, indicate whether the item has essentially an elas-
tic demand (E) or an inelastic demand (I). Indicate the most im-
portant reason for your classification from the list below in the
blank on the right.
A. Necessity
B. Luxury
C. Many available substitutes
D. Few available substitutes
E. Easy to delay purchase
F. Difficult to delay purchase
Elasticity
____ Automobile repair
____ Pack of cola
____ Pizza
____ 10-speed bicycle
____ Cosmetic plastic surgery
____ Loaf of bread
____ Bus service
____ Surfer T-shirt
____ Air conditioning
____ Fried Chicken (fast food)
____ Computer
____ Dental service
Reason
_____
_____
_____
_____
_____
_____
_____
_____
_____
_____
_____
_____
In groups of four, compare your answers and try to come
up with a group concensus. Then share your group's answers
with the whole class.
Activity 6. II. Predicting the effect of price increase on market demand.
You learned that the demand for a product or service is described
as elastic if a price increase results in a drop in sales. A product or service
has inelastic demand when a change in price has no effect upon sales.
Look at the list of consumer goods and services below. In the
blank on the left, indicate whether the item has essentially an elas-
tic demand (E) or an inelastic demand (I). Indicate the most im-
portant reason for your classification from the list below in the
blank on the right.
A. Necessity D. Few available substitutes
B. Luxury E. Easy to delay purchase
C. Many available substitutes F. Difficult to delay purchase
Elasticity Reason
____ Automobile repair _____
____ Pack of cola _____
____ Pizza _____
Analyzing Market Variables
____ 10-speed bicycle _____
____ Cosmetic plastic surgery _____
I. Each of the events listed below will affect the market for par-
____ Loaf of bread _____
ticular goods or services. Working with a partner, match the letter of
____ Bus service _____
the "effect" (A–D) with the events listed (a–d).
____ Surfer T-shirt _____
A. Supply will increase ____ Air conditioning _____
B. Supply will decrease ____ Fried Chicken (fast food) _____
C. Demand will increase ____ Computer _____
D. Demand will decrease ____ Dental service _____
a. Cost of obtaining oil for making plastics decreases.
b. The yo-yo fad comes to an end. In groups of four, compare your answers and try to come
c. An advertising campaign for basketball shoes is effective. up with a group concensus. Then share your group's answers
d. Personal income tax increase reduces available income for with the whole class.
purchasing stereos, TV's and other major appliances.
e. Government subsidy helps local carpet manufacturers.
f. New robots lower production costs for automobiles.
g. Drought ruins the rice crop.
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