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Section Questions Week 2

# Section Questions Week 2 - Questions for Economics 1 1...

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Questions for Economics 1 1. Consider the market for Kraft macaroni and cheese. Suppose that the price of orange food coloring, a critical ingredient in the production of Kraft macaroni and cheese, drops. In addition, suppose that income falls. Using a graph, illustrate what will happen to the equilibrium price and quantity of Kraft macaroni and cheese. If you need to make an additional assumption in order to answer this question, clearly state what that assumption is. 2. Consider the market for CDs. Suppose that the demand curve for CDs is given by Q D =200-10P and suppose that the supply curve for CDs is give by Q S =20P-100 . a. Graph the supply and demand curves b. Calculate the equilibrium price and quantity of CDs? c. Calculate the amount consumers paid (in total) for cds? 3. For each of the following, draw a diagram that illustrates the likely effect on the market for eggs. Indicate in each case the impact on equilibrium price and equilibrium quantity.

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