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- 1. Explain and illustrate what's going to happen in the market equilibrium of: a. Holiday abroad when there is a discount offered by domestic hotels. b. Corn when a large number of consumers becoming vegetarians. 2. Explain why the quantity demanded of meat will increase when there is fall in price of meat.Label axis and curves. Determine if the situation is a Demand or a Supply and specify which non-price determinants is involved. Illustrate on the graphs: o the new curve, the surplus OR shortage created the new Price at the new E 4. Answer the following scenarios for each of the next Non-Price questions 1 b) The minimum wage in Canada increased to 20$/h. Market of cheap noodles X2. In a competitive market, if the current price is below the equilibrium price, then P there is a surplus. S D O there is no tendency for the price to change if from its current level. there is a shortage. none of the other options. there is a tendency for the price to decrease from its current level.
- 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 month7. Other things equal, which of the following would NOT shift the supply curve for gasoline? a. a fall in the price of crude oil (from which gasoline is refined). b. an increase in the price of gasoline. c. an improvement in refining techniques that allows more gasoline to be squeezed out of a barrel of crude oil. d. an increase in the wages paid to people working in oil refineries..1. What is the equilibrium price in this market? 2. What is the equilibrium quantity in this market? 3. At a price of two dollars will there be a surplus or shortage of units in this market? 4. At a price of eight dollars how large of a surplus will there be in this market? 5. If the supply curve shifts to the right, will the price in this market rise or fall?
- 15. Give an example for the supply curve to shift to the right or left. Explain.2. Consider a competitive market for apartments in Bandung. What is the effect on the equilibrium price and quantity after the following (ceteris paribus)? In each case, explain your answer using the supply and demand curves. a. Increased level of consumer income.2. Consider the following demand and supply schedules and specify the inverse demand and supply functions: Price $10 $13 Quantity Demanded 18 12 Quantity Supplied 6 15
- 2. Suppose that annual demand in the U.S. market for ice cream cones can be expressed as QD = 800 + .2I - 100P, where QD is the number of cones demanded in millions of cones, I equals average monthly income in dollars, and P is price in dollars per cone. Supply can be expressed as QS = 200 + 150P (with the same units for quantity and price). A. Graph the demand and supply curves for ice cream cones, assuming that average monthly income is $2,000, and solve for the equilibrium price and quantity. B. Now assume that the average monthly income drops to $750 and supply is unchanged. Draw the new demand curve on the same graph as used in (a) above and solve for the new equilibrium price and quantity. How would you describe the shift in demand intuitively?3. If the price of coffee decreases, what will happen to the producer surplus in the market for doughnuts? A) Increase. B) Decrease. Depends on the slope of the supply and demand curves. Not information, cannot tell. D)3. Consider the following supply and demand model of the World tea supply (in billions of Kwacha) Price per Kg KO.38 КО.37 КО.36 КО.35 КО.34 | Quantity Supplied 1500 | Quantity Demanded 525 1000 600 700 700 600 900 550 1200 a) Using graphs determine the equilibrium price b) If there is a shortage or surplus when the price is KO.38 and KO.34, Calculate its size in billions of Kwacha and show that on the graph.