Supply & Demand- Group C

Consider the market for minivans. For each of the events listed below, identify which of the determinants of demand or supply are affected. Also, indicate whether demand or supply increases or decreases and the resulting effect on price and quantity demanded.


A) People decide to have more children

• As people decide to have more children there is a shift in the demand curve to the right due to a change in the number of buyers. The demand for minivans increases and the resulting effect is a rise in both price and quantity demanded.  

B) A strike by steel workers raises steel prices

• The rise of steel prices would shift the supply curve to the left due to the change in input prices. The supply for minivans decreases and as a result, the price rises and the quantity supplied decreases.

C) The price of sport utility vehicles rise

• As the price of sport utility vehicles rise, there is a shift in the demand curve to the right as SUV's are substitutes for minivans. The demand for minivans increases and as a result, both price and quantity demanded rise.

D) The stock market crash lowers people's income

• As the stock market crash lowers people's income, there is a shift in the demand curve to the left due to the change in consumer income. The demand for minivans decreases and as a result, the price falls and the quantity demanded falls.