Economics 304K: Spring 2008 Helen SchneiderProblems for DiscussionI. The Market Forces of Supply and Demand1. Consider the following two price-quantity schedules that describe the market for chocolate: P = Price of chocolate, in $ per pound and Q = Quantity of chocolate, in pounds.Schedule A Schedule BPQPQ16016814114712212610310584846563464227210800a. Which schedule is the supply schedule, and which is the demand schedule? EXPLAIN.b. What is the equilibrium price and quantity in this market? (Draw a diagram illustrating the equilibrium.)c. Suppose the price is currently at $4 per pound. What problem would exist in this market? What would you expect to happen to price? Graphically illustrate your answer. d. Austin American-Statesman(Jan. 25, 2006, p. E3) reports that eating dark chocolatelowersthe risk of heart disease. Indicate graphically and explain briefly how you predict this information will affect the market.
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