Transcript In Class Demand

In Class Exercise
4-15-2011
In-Class Exercise
Real Life Demand
Seattle Times
Olympic National Park officials are suggesting raising the price of an entrance pass
for motorists — good for seven days — from $15 to $25 starting in 2009, with the
fee for individuals such as cyclists climbing from $5 to $12. Season passes would
increase from $30 to $50
But public response, particularly from tourist-dependent local businesses has been
generally negative said a spokeswoman for Olympic National Park.
1.
Illustrate the effect of the increase of the price for park passes on
the demand for trips to the park
2.
Illustrate how the park fee increase would affect the demand for
other tourist-related businesses, e.g., hotels, restaurants.
WSJ
• Recent government data shows that a large proportion of
workers who had been laid off and are returning to the
work force are being hired back at wages that are 1020% lower than they had previously earned.
– a. How would that affect the demand for consumer
goods within the US
– b. How do lower wages affect the costs of US
produced goods
– c. How would (b) affect the demand for US goods for
foreign consumers (assuming foreign good prices
remained unaffected)?
WSJ
• The US Department of Agriculture recently
announced that they were revising
downwards their forecasts for corn and
soybean harvests for next year
– a. How does this revision affect the price for
corn/soybeans in the futures market?
– b. How does (a) affect the price of
corn/soybeans in today’s (spot) market?
– c. How does (b) affect the price of cornflakes
cereal (and other corn-based products)
today?