a Does this supply curve satisfy the law of supply Explain b What will happen

A does this supply curve satisfy the law of supply

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a. Does this supply curve satisfy the law of supply? Explain. b. What will happen to the supply of tomatoes if (i) wages paid to farm workers rise; (ii) there is a drop in the price of corn, which can be cultivated instead of tomatoes; (iii) there is a sudden early autumn frost before the tomatoes are harvested; (iv) a new mechanized tomato-picker is introduced that raises efficiency; (v) producers anticipate that the price of tomatoes will soon fall. c. Using the EconGraphKit, available at the Online Learning Centre, draw the market supply curve for tomatoes. d. If the quantity supplied of tomatoes doubles at every price, what will be the effect on the market supply curve you drew in part c? How would you describe this change? 2. A drop in the price of corn affects both the market for tomatoes and for corn. a. Is the change in the corn market a change in quantity supplied or in supply? Explain. b. Is the change in the tomato market a change in quantity supplied or in supply? Explain.
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46PART 1 Working with EconomicsThis decrease in quantity supplied is shown as a move down the supply curve in Figure 2.8 (from point ato e). Both responses reduce the surplus until price comes to rest where quantity supplied matches quantity demanded. Once this happens, the market has reached a stable equilibrium point—at a price of $2 in the case of the strawberry market. At this point, the amount of the product exchanged (9 million kilograms) is simply called “quantity” and can refer to either quantity demanded or quantity supplied. EFFECTS OF A SHORTAGEWhen price is below equilibrium, the quantity of strawberries that consumers wish to purchase exceeds the quantity supplied. This excess of quantity demanded over quantity supplied is called a shortage. Because of this shortage, some consumers are unable to purchase strawberries. For example, at a price of $1.50, the quantities demanded and supplied per year in the strawberry market are 11 and 7 million kilograms, respectively, giving a shortage of 4 million kilograms. A shortage in a competitive market pushes price higher. Once it becomes apparent that producers do not have enough to satisfy the prevailing quantity demanded, the demand of consumers who are determined to purchase strawberries causes some produc-ers to raise their prices, and soon all others do the same. Both consumers and producers respond to the price increase. Consumers purchase less, decreasing quantity demanded from point bto eon the demand curve. At the same time, producers provide more for sale, raising quantity supplied from point bto eon the supply curve. As a result of these movements up the demand and supply curves in Figure 2.8, the shortage shrinks until the quantities demanded and supplied are again equal at the equilibrium point. Market Demand and Supply Curves for Strawberries3.002.502.001.501.000.50Price ($ per kg)0 1 3 5 7 911 13 15
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