Divine Word College of San Jose
San Jose, Occidental Mindoro
Midterm Examination in Managerial Economics
Supply and Demand
The concept of supply and demand is often called the heart and soul of economics. It is the
foundation for much of what is studied in the field, and understanding how supply and demand
affect the economy can help us to recognize economics everywhere in our daily lives.
Part I
This activity connects supply and demand to the real world. Students will read articles that show
changes in supply or demand, or simply analyze the articles’ summaries and translate the content
to the analysis of demand, supply, quantity demanded and quantity supplied, and market
equilibrium.
Real World Connections: Supply and
Demand
Remember that all changes are other things being equal.
1. There is an oversupply of oil from increased North American and Saudi Arabian
production. Article: businesstoday.intoday.in/story/oil-prices-brent-crude-extends-loss-
on-supply-glut-jan- 14/1/214565.html
Market What Demand Supply Curve Shift Equilibrium price and
changed? quantity
Gasoline Supply No change Increased Supply to right Equilibrium price decreases;
(other things equilibrium quantity
equal)
2. New cage laws for chickens decrease the number of chickens (and therefore the
number of eggs).
Article: cbsnews.com/news/why-egg-prices-will-likely-rise-in-2015/
Market What Demand Supply Curve Shift Equilibrium price and
changed? quantity
Eggs Supply No change Decreased Supply to left A decrease in supply causes
(other things equilibrium price to rise and
equal equilibrium quantity to fall
3. Piano stores close down as fewer young people are taking up the instrument. The
article also mentions that technology has improved so that pianos last longer.
Article: lehighvalleylive.com/music/index.ssf/2015/01/piano_stores_closing_sales_plu.html
Market What changed? Demand Supply Curve Shift Equilibrium Price and
Quantity
Pianos Number of buyers; Supply Decreased Increased Demand to Equilibrium price falls; both
(technology increases) left; Supply to decrease in demand and
right increase
4. Consumers become more health conscious and reduce their consumption of donuts.
Article: newsmax.com/health/Health-News/sugary-
processed-foods- pastries/2014/12/29/id/615359/
Market What Demand Supply Curve Shift Equilibrium Price and
changed? Quantity
Donuts Number of buyers Decreased No change Demand to left Both decrease
Part II
Suppose that you are a writer for the blog All Things Chocolate and are writing a post that
illustrates how principles from your economics class can be illustrated by the market for
chocolate candy bars. You want to include some headlines from recent news stories. Find actual
news articles using chocolate to illustrate each of the following concepts, or if none are available,
create your own detailed headlines.
You may draw a graph to illustrate the changes in equilibrium.
1. Change in quantity demanded - Chocolate demand falls as candy bars shrink and Asia growth
slows; https://www.reuters.com/article/us-chocolate-demand-idUSKCN0VD2AZ
2. Change in quantity supplied - Chocolate Makers Fight a Melting Supply of Cocoa;
https://www.wsj.com/articles/chocolate-makers-fight-a-melting-supply-of-cocoa-1452738616
3. Change in number of buyers of chocolate bars- The Bittersweet Numbers on the U.S.
Chocolate Market; https://www.cspdailynews.com/snacks-candy/bittersweet-numbers-us-
chocolate-market
4. Change in the price of related goods- Rising cocoa prices eat into chocolate bars;
https://www.ft.com/content/ce8a6bec-1a8e-11e5-8201-cbdb03d71480
5. Change in consumer expectations- Crafting cocoa products to meet evolving consumer
expectations; https://www.bakingbusiness.com/articles/49154-crafting-cocoa-products-to-
meet-evolving-consumer-expectations
6. Change in income of chocolate bar buyers- Change in income of chocolate bar buyers –
BCDenergy; https://bcdenergy.com/gain-capital-djp/change-in-income-of-chocolate-bar-
buyers-8d8155
7. Change in technology- Nestle launches a new chocolate bar using sugar-reduction
technology; https://www.cnbc.com/2018/03/27/nestle-chocolate-bar-uses-science-technology-
to-restructure-sugar.html
8. Change in input prices- Why are chocolate prices jumping? – CNBC;
https://www.cnbc.com/2015/02/13/why-are-chocolate-prices-jumping.html
9. Change in the number of sellers- Changes in the number of producers;
http://www.ummat.ac.id/articles/changes-in-the-number-of-producers-d0bb9d
10. Change in producer expectations- Cocoa Prices Swing as Emerging Markets Get into
Chocolate; https://www.institutionalinvestor.com/article/b14z9tdk12b52q/cocoa-prices-swing-
as-emerging-markets-get-into-chocolate
- Nothing Follows -
God bless you!
