1) Suppose that the demand for oranges increases. Explain the long-run effects of the guiding function of price in this scenario. 2) Suppose that the demand for oranges increases. Carefully explain how the rationing function of price will restore market equilibrium.
Analytical Questions
1) Suppose that the
2) Suppose that the demand for oranges increases. Carefully explain how the rationing function of price will restore
3) For each of the following changes, show the effect on the demand curve and state what will happen to market
a.Consumers expect that the price of the good will be higher in the future.
b.The price of a substitute good rises.
c.Consumer incomes fall, and the good is normal.
d.Consumer incomes fall, and the good is inferior.
e.A medical report is published showing that this good is hazardous to your health.
f.The price of the good rises.
4) For each of the following changes, show the effect on the supply curve and state what will happen to market equilibrium price and quantity in the short run.
a.The government requires pollution control filters that raise costs on goods.
b.Wages of workers in this industry fall.
c.There is an improvement in technology.
d.The price of the good falls.
e.Producers expect that the price of the good will fall in the future.
5) For each of the following sets of
a.QD = 2000 - 2P; QS = 2P
b.QD = 500 - P; QS = 50 + P
c.QD = 5000 - 10P; QS = -1000 + 5P
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