Example 1:  The Market for Leather Sandals

Let's look at how different factors will affect the price and quantity of leather sandals in central New York.

A.  Mad cow disease requires the total destruction (and no use) of 20% of the worlds cows.

B.  Global warming leads to longer and hotter summers.

C.  PETA (an animal rights group) launches an advertising campaign against the use of animal products.

D.  The production of leather wallets and handbags declines in profitability.

 
 
 
 
 

Example 2:  The Market for Natural Gas

From January 2000 to January 2001, the price of natural gas has risen from $2.00 per BTU to over $10.00 per BTU.  We are going to examine why.

Using the diagram below, what changes in supply and/or demand are consistent with an increase in the price of natural gas?

What factors may have affected the supply of natural gas this winter?
 
 
 
 
 
 
 
 

What factors may have affected the demand for natural gas this winter?