^Worksheet

3	DEMAND AND SUPPLY

In the summer of 2006, the National Post predicted major changes in the world price of steel. The table below cites a series of events described in the National Post article. (Greenwood, John, “Bust could be worst since end of Second World War.” National Post (Ontario) 7 Jul 2006: pg. FP.1.Fr)

1. For each event, illustrate the impact on the relevant market and determine what will happen to the equilibrium price and quantity in that market.

Event	Market for:	Show which curve shifts	Equilibrium price rise or fall?	Equilibrium quantity increase or decrease?
China’s steel production capacity has expanded	Steel		Fall	Increase
Global economic growth is expected to slow in the next few quarters	Steel		Fall	Decrease
The Chinese government provides massive subsidies to Chinese producers	Steel		Fall	Increase
Manufacturers who use steel as an input have access to cheaper steel	Manufactured goods that use steel as an input		Fall	Increase