Problem Set 2

# Problem Set 2 - Supply and Demand-Chapter 4 and 5 This...

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Supply and Demand-Chapter 4 and 5 This problem set is due on Wednesday, Sep. 16. Please turn it in before we start the class. Late submissions will not be accepted. 1. Indicate whether the following describes an increase in supply , decrease in supply , or change in quantity supplied in the given market. a. Coffee bean prices hit an 18-month low following a jump in the size of the harvest. Market: coffee beans. b. Oil prices rise during the home-heating season and oil producers sell more oil. Market: home heating oil. c. The cost of pesticides increase, leading to a rise in the price of soy beans. Market: soy beans. d. A new innovation in micro-fiber technology allows manufacturers to double the amount of fiber produced per hour. Microfibers drop in price. Market: microfibers. 2. Use the following graph to answer the questions below. 0 100 200 300 400 500 600 700 800 900 100 \$0.00 \$5,000.00 \$10,000.00 \$15,000.00 \$20,000.00 \$25,000.00 \$30,000.00 \$35,000.00 \$40,000.00 \$45,000.00 \$50,000.00 Quantity thousands of cars Price per car Supply Demand

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a. What is the equilibrium price and quantity of imported cars?
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Problem Set 2 - Supply and Demand-Chapter 4 and 5 This...

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