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For questions 7 to 10, explain how the story affects the market and why. Draw a graph to reflect the story (curves for before and after each specified event). Label all curves, prices, and quantities. Describe what happens to the equilibrium price and quantity (arrows are fine).


1.        If oil executives read in the newspaper that massive new oil supplies have been discovered under the Pacific Ocean but will likely only be useful in 10 years, what is likely to happen to the market for oil today? (Assume consumers do not necessarily know this.)

2.        Airline workers go on strike. How does this affect the markets for air travel, and for train travel?

3.        Suppose there is a bitterly cold and unusually snowy winter that has significantly depleted the amount of available rock salt used to treat the roads. This is a major event. Suppose there is also a minor event – another snow storm coming next week, and roads and sidewalks need to be salted.

4.        After the release of the new Dan Brown novel, The Da Vinci Code, and sequels, there has been a renewed interest in the Mona Lisa painting. Noting that there is only one genuine Mona Lisa painting, how does this affect the value of the original Mona Lisa painting? How does this affect the value of knockoff Mona Lisa paintings? 

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