11:19Assessment- Sugar-rush-for-hy...Tuer costs.Production b0ostIf world sugar prices remain high, farmers are bound to plant more canes in future, in thehope of cashing in on the boom.Price of raw sugar 2009(cents per pound)2624222018161410 unMonthsSOURCE: ICEThere is already pressure on owners of prime Brazilian farmland to divert their resourcesfrom other crops, such as oranges, in favour of sugar.Brazil is the world's biggest producer of orange juice, shipping both frozen and chilledproduce around the world in specially-refrigerated vessels.But orange groves have to be cultivated for several years before they bear useful fruit - andthey need much more attention than sugar canes.In India, the trend appears to be going the other way.Many farmers moved away from sugar-cane in 2008 because they could get better,government-guaranteed prices for other crops, such as wheat and rice.For questions 4-6 you need to write a short paragraph explaining what has occurred andillustrate it with a supply diagram. It will be 8 marks for Ouestions1.) What is meant by supply?2.) What is the difference between a movement along the supply curve and a shift onthe supply curve? (-3.) List 5 examples of a shift on the supply curve4.) What has happened to the supply of Indian sugar this year?.5.) What has happened to the supply f Brrilian sugar as a result of the growingdemand for ethanol to fuel cars? -6.) What does the representative of Archer Consulting predict w" happen to the supplyof ethanol as a result of the Indian demand for sugar? (21 Jul30 Jul10 Aug19 Aug28 Aug 11:19Assessment- Sugar-rush-for-hy...Sugar rush for hyperactive BricsBy Robert Plummer, Business reporter, BBC News, 2/9/09The price of raw sugar is hitting highs not seen for nearly three decades - and the surgeis having a sweet-and-sour effecet on two of the burgeoning Brie economies.Sugar futures reached more than 24 cents a pound this week, the dearest they have beensince February 1981.That makes it a valuable earmer for the Centre-South region of Brazil, the largest sugar-canegrowing area in the world.At the same time, Brazil's position is strengthened by a collapse in production in India, theworld's number two sugar producer.The weakest monsoon rains in the Asian subcontinent for many years have led towidespread drought, hitting crops hard.However, India remains the top consumer of sugar and is relying on Brazilian imports tomake up the shortfall.Up to one million tonnes of Brazilian sugar have been bought by India in recent weeks,according to traders' estimates - and producers are betting that prices may climb as high as30 cents a pound before the current run peaks."There's still room for a further increase in prices if Indian demand remains strong," saysPlinio Mario Nastari of Brazil's Datagro consultancy.Food or fuel?All splendid news for Brazilian sugar plantation owners, you might think. But whereas Indiahas had a shortage of rainfall, Brazil's cane crops have been waterlogged by heavier-than-expected downpours.Sugar-cane needs dry weather to ripen in order to maximise its sucrose content, but northernSao Paulo state, one of the key areas of cultivation, has had its heaviest August rainfall inусаrs.That means more customers chasing less of the sweet stuff - and those customers includenot only people with a sweet tooth, but also the majority of Brazil's motorists.In recent years, more and more Brazilian sucrose has been turned into ethanol rather thansugar, as the country's roads have seen a huge increase in the number of "flex-fuel" vehiclesthat run on a mixture of petrol and alcohol.Rise, fall and rise of Brazil's biofuelMore than 90% of new cars in Brazil are adapted to accept ethanol as fuel, thanks to a state-run biofuel programme that began during the country's years of military rule as a way ofreducing its dependence on oil imports.So far, the cost of alcohol at the filling station has not reflected the 80% rise in raw sugarprices since the start of this year.However, pump prices have started to creep up in recent weeks, and analysts expect them torocket after the end of the sugar-cane harvest, which lasts from April to November."India is demanding sugar, which is priced 40% above cost, while alcohol is being soldbelow cost," says Amaldo Luiz Correa of Archer Consulting in Sao Paulo.For that reason, he says, factories will switch production from ethanol to sugar, pushing upfuel costs.Production boostIf world sugar prices remain high, farmers are bound to plant more canes in future, in thehope of cashing in on the boom.Price ot raw sugar 2009(cents per pound)26242220181614.MonthsSOURCE: ICEThere is already pressure on owners of prime Brazilian farmland to divert their resourcesfrom other crops, such as oranges, in favour of sugar.Brazil is the world's biggest producer of orange juice, shipping both frozen and chilledproduce around the world in specially-refrigerated vessels.But orange groves have to be cultivated for several years before they bear useful fruit - andthey need much more attention than sugar canes.In India, the trend appears to be going the other way.Many farmers moved awgovernment-guaranteed prices for other crops, such as wheat and rice.i 000 d get better,10 Aug19 Aug28 Aug

1.) What is meant by supply? 2.) What is the difference between a movement along the supply curve and a shift on the supply curve? (- 3.) List 5 examples of a shift on the supply curve 4.) What has happened to the supply of Indian sugar this year? 5.) What has happened to the supply of Br rilian sugar as a result of the growing demand for ethanol to fuel cars? 6.) What does the representative of Archer Consulting predict " happen to the supply of ethanol as a result of the Indian demand for sugar? (

1.) What is meant by supply? 2.) What is the difference between a movement along the supply curve and a shift on the supply curve? (- 3.) List 5 examples of a shift on the supply curve 4.) What has happened to the supply of Indian sugar this year? 5.) What has happened to the supply of Br rilian sugar as a result of the growing demand for ethanol to fuel cars? 6.) What does the representative of Archer Consulting predict " happen to the supply of ethanol as a result of the Indian demand for sugar? (

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. If we assume that Coke and Pepsi are substitute products, what would happen to the supply and demand for Pepsi if Pepsi raised their price? What would happen to the supply and demand for Coke if Pepsi raised their price? (Be sure to think about what consumers would do and what effect their behavior has on demand. Then think about in the long run what the companies would do to adjust to any changes in demand) 2. In the United States, oranges are grown primarily in Florida and California. Imagine if there is a freeze in Florida that destroys 20% of the orange crop. What would happen to the market for Florida oranges? How would the California orange market change?
7. Notepads and pens can be considered to be complements. Woodchips are an input to notepads, and plastic is an input to pens. Assume markets for notepads, pens, woodchips and plastic, are all perfectly competitive. Suppose that the equilibrium price of notepads increases, and the equilibrium price of pens decrease. Which of the following could explain these changes? a) A decrease in the supply of plastic b) An increase in the demand for wood chips c) An increase in the demand for plastic d) An increase in the supply of plastic e) Either (b) or (d)
4) Suppose a market starts in equilibrium; then we observe a decrease in supply and a decrease in demand simultaneously. What can we say about the new equilibrium? Illustrate.
Answer the following questions by using demand and supply analysis. a) Beef supplies are sharply reduced because of a drought in the animal raising cities, and consumers turn to chicken as a substitute for beef. i. How would you illustrate this change in the beef-market in supply-and- demand terms? How do the equilibrium price and equilibrium quantity of beef change? How would you illustrate this change in the chicken-market in supply-and- demand terms? How do the equilibrium price and equilibrium quantity of chicken change? ii. b) During the summer months, the price of ice cream increases and the quantity of ice creams sold also increases. Is this a violation of the law of demand? Briefly explain and discuss your response.
4) Suppose a market starts in equilibrium; then we observe a decrease in supply and a decrease in demand simultaneously. What can we say about the new equilibrium? Illustrate.
2.
3) Coca-Cola: Suppose that Pepsi decreases the price of its six-packs from $3.00 to $2.50. How would this news change the demand for six-packs of Coca-Cola? a. First, graph the situation with price of Coca-Cola and quantity of Coca-Cola. Use BLACK for supply, BLUE for demand. Label supply as Sı and demand as Dj and D2. b. Using your knowledge of the laws of supply and demand, explain the shift(s) that have been made in your graph and describe what happened to the equilibrium price and quantity (3-4 bullet points), Make sure to include the 8 determinants of demand or 5 determinants of supply. Label the equilibrium points CLEARLY! c. Add a picture of Coca-Cola vs. Pepsi.
4. U.S. agricultural farmers are excited since the government announced an increase in subsidies even though the substitutes for agricultural goods that are imported have increased in demand; therefore, please illustrate by constructing a supply and demand graph, the direction in which the curves will shift and state the new equilibrium price and quantity; for example, state whether price and quantity increased, decreased, or are indeterminate. Please explain your rationale based on the determinants of demand and supply.
1. Use the market model of supply and demand to illustrate and explain the impact of the following events on the market for coffee. Make sure to identify which side(s) of the market is impacted, explain why it is impacted, how it is impacted, and the overall impact on the equilibrium price and quantity. a) The price of tea goes up by 100 percent. b) A study is released that links consumption of caffeine to increased incidence of cancer. c) Workers in the coffee industry unionize and negotiate higher wages.
7. Movements along versus shifts of supply curves Consider the market supply of hot dogs. Complete the following table by indicating whether an event will cause a movement along the supply curve for hot dogs or a shift of the supply curve for hot dogs, holding all else constant. Event Movement Along Shift A change in technology that makes it less costly to produce hot dogs An increase in the price of hot dogs A decrease in the number of producers
9. In recent years, the number of car producers in China has increased rapidly. In fact, China now has more car brands than the United States. In addition, car sales have climbed every year and automakers have increased their output at even faster rates, causing fierce competition and a decline in prices. At the same time, Chinese consumers' incomes have risen. Assume that cars are a normal good. Draw a diagram of the supply and demand curves for cars in China to explain what has happened in the Chinese car market.
2. For each of the following, explain whether there is a shift in market demand or a movement along the market demand curve for Brussel Sprouts and in which direction: а. Consumers' incomes increase b. The price of Cauliflower increases c. Consumers of Brussel Sprouts expect the price to decrease next month