Team members: ________________________________________________
Date:
Micro Basics — Team Practice
AGB 3301 — Food Marketing
Credit: 25 points
Work in your team and Discuss together before you write your responses.
Part 1 — Shift, or movement along the curve? (5 points)
Circle one for each.
Situation
Shift
Movement
The price of eggs rises, and shoppers buy fewer eggs.
○
○
A news story links a snack to health benefits, and sales rise even though the price is
unchanged.
○
○
A frost destroys part of the orange crop.
○
○
Coffee prices fall, and roasters bring less coffee to market.
○
○
Household incomes rise, and families buy more fresh berries at every price.
○
○
Part 2 — Which curve, and what happens? (8 points: 2 points each scenario)
For each scenario, name the curve that moves, the direction, and what happens to equilibrium price and quantity.
Scenario
Supply or
demand?
Back or out?
Price
Quantity
A new tortilla plant opens in the region.
The price of butter rises sharply. (Consider the
market for bread.)
Fuel costs for refrigerated trucking double.
A viral video makes cottage cheese popular again.
Part 3 — Who shifts what? (4 points: 0.5 points each)
Write D if it shifts demand, S if it shifts supply.
Cause
Cause
Changes in buyers' income
___
The price of a substitute good changes
___
Changes in technology
___
A new tax is placed on producers
___
Consumers' expectations about future prices
___
The number of producers in the market changes
___
A hurricane damages a growing region
___
Changes in buyers' tastes and preferences
___
Part 4 — Two things at once ( 6 points)
Demand for beef shifts out at the same time that a drought raises feed costs and shifts supply back.
What happens to the equilibrium price? What happens to the equilibrium quantity? Be careful — one of these you can
answer with certainty and one you cannot.
Part 5 — One sentence (2 points)
Prices are high and a producer would love to supply much more. Name two specific things that stop them in the short
run.
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