a. In 2009, the Japanese beer industry was affected by two economic events: (1) Japan’s government imposed on producers a tax on all beer sold, and (2) Consumer income fell due to the continuing economic recession.
How would each factor affect (i.e., shift) demand or supply? What impact do you predict on industry output and price?
b. In 2011, the U.S. trucking industry faced the following economic conditions: (1) At last, the US economy was recovering from a prolonged slump (during which trucking had shrunk its capacity by 14%), (2) The government instituted new regulations imposing more frequent equipment inspections and restricting operators’ daily driving hours, and (3) Year over year, diesel fuel prices were up by 9 percent. For each separate effect, show whether and how it would shift the industry demand curve or supply curve. What overall impact do you predict on industry output (measured in total volume and miles of goods transported) and trucking rates?