Econ1-Fall2010-PS2 - Econ 1 Problem Set#2 Supply and Demand...

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Econ 1 Problem Set #2: Supply and Demand Fall 2010 After the Tuesday (10/5) lecture you should be able to identify shifts in demand where appropriate. We haven’t covered it yet but you also may be able to identify shifts in supply. (We will cover changes in supply, market equilibrium and new material on Thursday.) 1. 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. a. A surgeon general warning that high-cholesterol foods can cause heart attacks. b. A decrease in the price of bacon, a complementary product. c. An increase in the price of chicken feed. d. Caesar salad becomes popular at dinner parties. (The dressing is made with raw eggs.) e. A technological innovation that reduces egg breakage during packing. 2. Consider the market for high definition televisions (HDTVs). a. Scenario 1: Using a supply and demand graph, show what will happen to
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