Data Response

      1- A) Demand: The quantity of a good or service that consumers are willing and able to purchase at a given price in a given time period. 

B) Economic Growth: A growth in national income per capita, which means a steady development in the productive capacity of the economy.

2- One possible reason for the increase in copper prices is the increase in demand for the product. From reading the article we learn that there is a high demand of copper in China due to several different projects taking place in the location. Some of these include constructions and the “Shanghai Expo” as well as goods such as cables made of copper ("huge quantities of electrical cable were laid.") and factors such as China´s economic growth. These factors immediately have a rising impact on the demand of copper at any price for it´s a necessary material to achieve the closure of projects in the current structural development of the country.

An increase in demand for copper is expressed in the graph below with a shift to the right on the demand curve, which could possibly affect the price, and should eventually keep the supply curve in place if followed the rule of ceteris parabus. However, there must be a period of excess supply in order for suppliers to learn the real demand values and create equilibrium between the two factors; this is represented in the space between Q1 and Q2. To meet this equilibrium, the suppliers will increase the Price of the product when the supply is scarce, for the demand will rise inversely to this fall. 

3- The price of consumer goods such as new washing machines might be expected to rise due to a   predicted increase in demand for regular goods to supply the new constructed structures. ("And, at the end of every new power socket is a demand for new washing machines, fridges and other products that need copper”). The article states that "the price of copper passed $8,000 tons." meaning that products such as washing machines and fridges, which need copper to be built, will dramatically increase in price too for their production will become far more expensive, this is a non-price determinant.

When the price increases, the supply curve shifts to the left because less quantity of the product is supplied at every price. To find equilibrium by exercising ceteris parabus, the price will eventually have to drop in order to attract more consumers and sell more quantities of the product at every price.

The graph below shows a shift to the right of the supply curve, and the period of excess supply between Q2 and Q1. The market will eventually raise the price to compensate for this lowered supply will make the product more desired and scarce. Equilibrium is then found at a new balanced price.

                          

                   

4-Taking into account the fact that the copper industry is very much needed for daily-use apparatus (washing machines, cables), I would probably speculate that although the building of specific projects in China that use copper will end soon, making the copper demand drop to some extend, there are many other important uses given to this material and there is a period of time during which these apparatus work until they have to be replaced. I believe that when the projects finalize, the demand for copper will decrease, but it will not be a drastic fall due to the new acquisition of these previously mentioned goods for a short time afterwards. However, I must assume that after the period for acquisition expires and all of the needs at the time are satisfy, there will actually be a drastic drop in the demand for the material at least for a period of time, making the suppliers lower the price and production of the product, until the average time for replacement of these parts comes again, forcing consumers to buy more of the product to replace the old ones, or when a new project arises that requires copper as a part of it´s structure.

Demand Curves

1- Distinguish between a shift of the demand curve for a product and a movement along the product´s demand curve.

According to Wikipedia demand is “an economic principle that describes a consumer's desire, willingness and ability to pay a price for a specific good or service… refers to how much (quantity) of a product or service is desired by buyers.” The demand for a product as well as its price may vary due to several possible changes in certain variables (price determinants and non-price determinants).

The demand curve (“graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at that given price.”^[1]) can subsequently respond to the changes in demand with two different movements: Shift to the left, which represents a decrease in the demand at every price or a shift to the right, which signifies an increase in the demand for a product at each price.

There is one specific variable capable of causing a movement along the already existing demand curve and it is the price of the given product. This is because the demand for whatever is being supplied is inversely proportional to its cost, meaning that as the price rises the demand lowers and vice versa.

The ceteris parabus is a “method” stated by the Law of Demand we use to make the inverse proportion previously referred to function. This Law of Demand further explains the concept of the cost of a product affecting its demand by outlining the influence the income and the substitution effect have on the economic impact of a product. The income effect refers to the increase in popularity of a certain good whose price has fallen, and thus attracts buyers, who can now more easily afford to buy more of the product. On the other hand, the substitution effect also originates from a fall in price, which makes the product more desirable, but is specific about how this decrease in cost makes it more attractive to costumers than other similar, more expensive products. An example of a substitution effect would be the price of Nike trainers decreasing, allowing more costumers to afford them, and thus attracting them to buy the product instead of other similar, more expensive brands. Any variation in demand produced by the price determinants will as a result cause a movement along the demand curve.

On separate terms, we may expand on non-price determinants and their effects on the demand curve by stating that the many complex variations  (usually linked to microeconomics) do not include changes in the price of the given product.  Some general factors that may affect this shift include: the age structure of a population, it´s size, variations in income distribution, government policy changes and seasonal changes (clothing) and other, more complex variables such as the specific costumer preferences (brands, quality), variations in the buyer´s income, competition between similar products and an increase in demand for a good, which needs a complementary product (Bicycles need tires made from rubber, so their price depend of that of rubber production.).

In conclusion we can determine the effect that each type of change will have on the demand curve of a certain product by understanding whether it is a variation in price, which will lead to a movement along the curve, according to the income and substitution effects, or a change in any other possible factor, leading to a left or right shift of the demand curve which represents the influence of more complex, external factors on the demand of a product.

1-http://en.wikipedia.org/wiki/Demand_curve

      2- With reference to two different determinants of demand, explain why the demand curve for bicycles might increase.

Several diverging factors should be taken into consideration when referring to the causes of an increase in a product´s demand. However, there are two ways to visually represent the effects these factors can have on the demand curve. These are: a shift to the right of the curve due to external factors, or the rise of demand along the curve (movement within) as a consequence of a decrease in cost.

When referring to bicycles specifically, it is possible to achieve a variation in the demand curve due to factors such as competition and substitution. If the production of primary goods to building other mediums of transport increases in price, the whole final product´s price will increase too affecting the investment costumers are willing to apply. If this happens, then the more economic alternative (bicycles) will grow more popular and demand for it will rise. Because this symbolizes an increase in demand at every given price, the demand curve would shift to the right as shown in the graph:

There are many factors that could affect the demand for bicycles both positively or negatively.  These factors, and the ones stated before, link directly to the idea of the two different effects, income and substitution. This is merely because the production of bicycles, as mentioned in the previous question, relies on the price and production of other primary materials such as aluminum and rubber. If for any reason the price of any of these primary materials decreases, the production of bicycles (final product) in general would become far less expensive and would increase the “real income” of consumers now attracted to the more affordable product. The decrease in price will affect the demand for the product positively and vary the curve´s structure are shown in the graph below:

In conclusion, several possible determinant factors may affect in different ways the demand curve for a popular product such bicycles as their production and supply are analyzed and expanded into a more complex comprehension of their balance.

Ana Gabriela Gonzalez