2 A Long December This winter is hotter than normal, so people want fewer wool scarves than before...however, a new break- through in genetic engineering caused many sheep to grow hair (used to make wool) much faster this year. Show what happens in the market for wool. In the left graph, show a big change in D and small change in S. In the right graph, show a small change in D and a big change in S. Please indicate what happens to price and quantity relative to the initial equilibrium. Either price or quantity will be ambiguous in each instance, so each question will have 2 possible graphs. Draw them both. BE SURE TO LABEL axes and curves. P Q Which change is ambiguous, price or quantity? P Q. What happens to the other one?

2 A Long December This winter is hotter than normal, so people want fewer wool scarves than before...however, a new break- through in genetic engineering caused many sheep to grow hair (used to make wool) much faster this year. Show what happens in the market for wool. In the left graph, show a big change in D and small change in S. In the right graph, show a small change in D and a big change in S. Please indicate what happens to price and quantity relative to the initial equilibrium. Either price or quantity will be ambiguous in each instance, so each question will have 2 possible graphs. Draw them both. BE SURE TO LABEL axes and curves. P Q Which change is ambiguous, price or quantity? P Q. What happens to the other one?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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