Trucking Industry Analysis: Market Model, Equilibrium Price & Quantity

This assignment utilizes the market model of supply and demand to evaluate the effects of various events on the equilibrium price and quantity within the trucking industry. It examines scenarios such as increased demand for truck drivers due to economic growth, increases in truck driver salaries, alternative career options impacting driver supply, and government policies allowing entry of truck drivers from third-world countries. The analysis identifies the shifts in the demand and supply curves, determines the affected determinants of demand and supply, and explains the resulting changes in the equilibrium price and quantity for each scenario. The assignment references a real-world situation in 2018 where a shortage of truck drivers led to increased shipping costs and, consequently, higher prices for various goods, illustrating the broader economic impact of the trucking industry's dynamics.

Question 2:
Use the market model of demand and supply to evaluate the effect of the
following events on the equilibrium price and quantity in the various
product and service markets. You may choose any product or service
and discuss the results in the table provided below.
“The trucking industry shows how an extraordinary labor shortage in one
corner of the economy can spill out and affect the economy more broadly.
Shipping costs have skyrocketed in the United States in 2018, one of the
clearest signs yet of a strong economy that might be starting to overheat.
Higher transportation costs are beginning to cause prices of anything that
spends time on a truck to rise. Amazon, for example, just implemented a 20
percent hike for its Prime program that delivers goods to customers in two
days, and General Mills, the maker of Cheerios and Betty Crocker, said
prices of some of its cereals and snacks are going up because of an
"unprecedented" rise in freight costs. Tyson Foods, a large meat seller, and
John Deere, a farm and construction equipment, also recently announced
they will increase prices, blaming higher shipping costs.
Long, H. (2018). The U.S. doesn’t have enough truckers, and it’s starting to
cause prices of about everything to rise. The Washington Post.
https://www.washingtonpost.com/news/wonk/wp/2018/05/21/america-
doesnt-have-enough-truckers-and-its-starting-to-cause-prices-of-about-
everything-to-rise/?utm_term=.6ca8a267f036
Your Answer:
Product
or
Service
Would the
demand curve
or supply curve
shift?
What
determin
ant of
demand
or supply
is
affected?
Would the
curve
shift to
the right
or left?
Changes in
the
equilibriu
m price
Changes in
the
equilibrium
quantity
Truck
Drivers
Demand Higher
economic
growth
Right as
the
demand
would
increase
Increases Increases
Truck Supply Increase Right as Decreases Increases

Drivers in
salaries
of truck
drivers
the supply
would
increase
Truck
Drivers
Supply Rise in
salaries
of other
professio
n
Left as
the supply
would
decrease
owing to
some
drivers
taking
alternativ
e
profession
s
Increase Decrease
Truck
Drivers
Supply Decision
on the
part of
the
governm
ent to
allow
entry of
truck
drivers
from
third
world
countries
Right
owing to
higher
supply of
drivers
Decreases Increases

Grading Rubric:
Dimensions Exemplary Unacceptable
Shifts in the
Demand and
Supply
The correct curves shift.
The curves shift in the correct
direction.
If none of the curves shift it is
clearly stated that this is the
case. 4
Incorrect curves shift.
OR shift in the wrong
direction.0
New Equilibrium It is clearly stated what happens
to the equilibrium price and
quantity. 4
It is not clear what
happens to the
equilibrium price and
quantity. 0
Determinant of
demand,
Determinant of
supply
It is clearly stated what
determinant of demand or supply
is affected. 4
It is not clear what
determinant of
demand or supply is
affected. 0