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Factors Affecting Demand and Market Prices: Park Passes, Wages, and Crop Forecasts

Explore the impact of price increase for park passes on park visits and tourism-related businesses, the effects of lower wages on consumer goods and US-produced goods, and the influence of revised crop forecasts on corn/soybean prices and corn-based products.

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Factors Affecting Demand and Market Prices: Park Passes, Wages, and Crop Forecasts

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  1. Homework #2 Week 2 Factors Affecting Demand

  2. In-Class Exercise Seattle Times Oct 3 Olympic National Park officials are suggesting raising the price of an entrance pass for motorists — good for seven days — from $15 to $25 starting in 2009, with the fee for individuals such as cyclists climbing from $5 to $12. Season passes would increase from $30 to $50 But public response, particularly from tourist-dependent local businesses has been generally negative said a spokeswoman for Olympic National Park. • Illustrate the effect of the increase of the price for park passes on the demand for trips to the park 2. Illustrate how the park fee increase would affect the demand for other tourist-related businesses, e.g., hotels, restaurants.

  3. WSJ 1-12-2011 • Recent government data shows that a large proportion of workers who had been laid off and are returning to the work force are being hired back at wages that are 10-20% lower than they had previously earned. • a. How would that affect the demand for consumer goods within the US • b. How do lower wages affect the costs of US produced goods • c. How would (b) affect the demand for US goods for foreign consumers (assuming foreign good prices remained unaffected)?

  4. WSJ • The US Department of Agriculture recently announced that they were revising downwards their forecasts for corn and soybean harvests for next year • a. How does this revision affect the price for corn/soybeans in the futures market? • b. How does (a) affect the price of corn/soybeans in today’s (spot) market? • c. How does (b) affect the price of cornflakes cereal (and other corn-based products) today?

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