2. Does the equilibrium price for a particular product rise or fall with each of the following changes? Draw small freehand graphs to illustrate your answer.
   1. Demand increases and supply stays the same.
   2. Supply decreases and demand stays the same.
   3. Supply increases and demand stays the same.
   4. Demand decreases and supply decreases. 
   5. Demand increases and supply decreases.
   6. Demand decreases and supply increases. 
3. Consider each of the following scenarios in the North American gasoline and oil market. Draw freehand demand and supply graphs to determine the changes in quantities demanded and supplied, and in market prices, in response to these scenarios.
   1. The North American economy is prosperous, and automobile sales, particularly those of fuel-inefficient SUVs and vans, rise. 
   2. After 11 September 2001, the North American economy slips into a recession, and automobile sales plummet. 
   3. War in the Middle East resulted in a sharp fall in oil exports to North America.
   4. Automobile manufacturers develop new engines that significantly improve the fuel efficiency of all models. 
4. 
   

Answer rating: 100% (QA)

Changes in Equilibrium Price due to Demand and Supply Shifts Demand Increases Supply Stays the Same Demand Curve Shifts to the right increased demand at all price points Equilibrium Price Rises More b... View the full answer