Supply and Demand and Equilibrium Price

Topics: Supply and demand, Consumer theory, Elasticity Pages: 4 (699 words) Published: July 7, 2013

1. Suppose that the international market for beef is in equilibrium. Describe in a written sentence how the following change to a determinant of supply and/or demand will affect the equilibrium price and quantity. Illustrate each answer with a supply-and-demand diagram depicting the shift(s) and the resulting effect on price and quantity a. Outbreak of mad cow disease kills off much of the cattle stock. b. The price of chicken, a substitute, declines sharply. c. A worldwide economic boom results in higher average incomes. d. Beef (red meat) is shown to cause high blood pressure in laboratory rats. e. Rumor of a massive outbreak of Bird Flu spreads

f. Rumor is started that leads consumers to believe beef will be more expensive. (Producers know the rumor is untrue). 2. Explain using a diagram why during Eid Season the price of cloth increases even though the supply of cloth is high. 3. Explain why before Eid the various transports charge extra money? 4. Explain why Mobile companies can charge lower call rate at night? 5. Consider the ipad market of Bangladesh. Indicate separately the effects of the following events on the equilibrium of ipad market a. Apple offers surround sound system installed with each ipad with out charging any extra price. b. Tornado destroys production plants of ipad.

c. Samsung reduces its price.

6. The demand and supply schedules for small bags of noodles in millions of bags per year are: (Consider 52 week in a Year) Price/bag Quantity Demanded Quantity Supplied 10 50 70 9 60 65 8 62...
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