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problem set 2 - Economics 101 Prof.Schuler Spring 2008...

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Economics 101 Prof.Schuler Spring 2008 Problem Set 2 Due date : Wednesday, February 13,2008 in lecture Q.1 Graph the effect on equilibrium price and quantity in the market for oranges for each of the following changes (graph each one separately). There are many buyers and producers of oranges. a. A chemical routinely sprayed on orange orchards is found to cause cancer. b. The wages of farm workers increase. c. A new orange picking machine is invented. For the same cost, it can pick more oranges, faster, and with less damage than other machines. d. Consumer income falls. e. The price of tangerines falls. f. Graph the effect on equilibrium price and quantity in the orange market if both (a) and (b) occur simultaneously. Q.2 The market for pizza has the following demand and supply schedules: Price /pizza Quantity Demanded Quantity Supplied $4 135 26 5 104 53 6 81 81 7 68 98 8 53 110 9 39 121 a. Graph the demand and supply curves. What is the equilibrium price and quantity in the market?
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