Unformatted text preview: 3. The breadth of the market- one brand vs. all brands Suppose there are 2 hotels in Cedar Key: the “Fisher’s Delight” and the “Happy Clam.” Suppose the cleaning staff at the happy clam is planning to go on strike while a cateogory 5 hurricane is about to destroy the fisher’s delight. Compare the effects of the strike if it happens before the hurricane vs. after the fisher’s delight falls over. Answer: First we see the word compare so we draw 2 panels. Then we label the graphs. We know the first graph is elastic b/c there is a close substitute, the other hotel. After Fisher’s delight falls, there is only one hotel left making it inelastic. Since there is a strike, supply shift to the left. Then we can label our graph....
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- Spring '08
- Supply And Demand, inelastic demand curve, elastic demand curve, happy clam