Using shifts in supply and demand curves, describe two changes in the industry in which your firm operates. The changes may arise from a change in costs, entry/exit of firms, a change in consumer tastes, a change in the macroeconomy, a change in interest rates, or a change in exchange rates. Label the axes and state the geographic, product, and time dimensions of the demand and supply curves you are drawing. Explain what happened to industry price and quantity by making specific references to the demand and supply curves. One change should affect demand and the other, supply; decompose the changes into smaller pieces so that your explanation has a step-by-step character to it. You should have no less than three graphs: (1) one for the demand shift (similar to Figure 8.4 in the text), (2) a corresponding one for the supply shift, and (3) a graph showing the overall combined effects (similar to Figure 8.5 in the text). You will likely not have access to the data to construct supply and demand graphs using actual numbers, and this is not a research paper where you will have to hunt down actual data. Instead, you will have to make assumptions, and your grade will depend in large part on how you critically think through this problem. For example, did you draw your demand curve steep or flat? Use Chapter 6 to explain the elasticity implications associated with the way you drew your curves and to offer advice on whether your company should increase or decrease the price (see section 6.3-6.4 in the text). In some industries, such as health care, there are regulatory constraints that would limit a firms ability to simply change the price. For this exercise, assume that your company has full control of the price, and base the entire analysis on the framework you developed.

Instructions:

The document should be in APA format and be approximately 1,000 words in length. The paper does not need an abstract, but the other components associated with APA, e.g., title page, running header, body, and references are required. Your introduction might be background information regarding your industry; then, set up the rest of the paper by introducing your shift factors. Use headings in your body prior to each of your figures, and be a little creative. For example, if your industry is soft drinks, rather than say decrease in supply, you may say something like the effect of trade tariffs on aluminum.