Use the supply and demand model to explain what happens to the equilibrium price and the equilibrium quantity for the product in the following cases; be sure to identify and explain the "determinant" that is changing; provide a step-by-step explanation and provide a sketch with only one curve shifting. Scenarios to analyze follow. All scenarios start from the initial conditions of 10 iced lemonades being sold selling at $4 per red Solo cup. Students may make up all other numbers. Make up reasonable shifts and numbers. The relevant market for each scenario is the iced lemonade market. See an example after the scenarios. a) Portia, seeing Leander's success in selling iced lemonade, and opens her own lemonade stand three houses down the street. b) McHades, the local fastfood restaurant a couple blocks away, raises the price of its iced sweet tea. c) Dr. Zeus warns that the acid in lemonade will ruin your teeth if you also drink a lot of coffee. d) Ganymede, Portia's business advisor, tells Portia that tomorrow will be cold, windy, and wet compared to today. e) Old lady Diana, Portia's neighbor offers both Leander and Portia free lemons from her lemon tree. f) At noon, a new family, the Dionysii, are moving into the neighborhood. This new family has 8 kids, six years to twelve years old-all thirsty! g) Leander's mom, Gaia, brings out the blender to help Leander make more iced lemonade more quickly. Portia's neighbor, Ajax, is given $20 by his father Prometheus, to treat the neighborhood kids to iced lemonade. h) $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $- i) As everyone knows, peanuts are a great food to consume along with iced lemonade. Hermes Food Delivery service is running a special 4-bags-of-peanuts per dollar-down from 1-bag-of-peanuts per dollar. The local city license inspector, Lyssa, imposes a $1 tax on lemonade stands. j) Example) On a hot day, Leander discovers that more cars are stopping at his front lawn iced lemonade stand to enjoy a cup. 1) Our focus is on the iced lemonade market near the Acropolis in Athens. 2) The determinant is "preferences." People have a preference for more iced lemonade on a hot day. 3) Preferences are a determinant of demand. If the day is hot, preferences favor the product iced lemonade, and demand is increased. When demand increases, the demand curve shifts right from blue to grey curves. 4) The new equilibrium is at a higher price ($1 more an increase from $4 to $5) and at a higher quantity traded (5 Solo cups more an increase from 10 to 15). 0 2 4 6 8 10 12 14 16 18 20 Note: Students should label all relevant features of the supply & demand diagram and perhaps explain the equilibration process.