1. Arrow up or down: Hurricane Katrina ____ the demand for housing in Baton Rouge, so the price of housing and the quantity of housing ____.

2. Arrows up or down: The decrease in the number of bee colonies _____ the supply of fruits and berries, ____ the cost of producing ice cream, and ______ the equilibrium price of ice cream.

3. Between 2008 and 2009, the equilibrium price of cruises ___ because ____ and demand ____.

4. Arrow up or down: The development of a sun-tolerant variety of the vanilla plant ___ the supply of vanilla and its price.

5. Arrow up or down: The drought in Australia ____ the supply of rice and its price.

6. Katrina Victims Move Back. Suppose that five years after Hurricane Katrina, half the people who had relocated to Baton Rouge move back to a rebuilt New Orleans. Use a demand and supply graph of the Baton Rouge housing market to show the market effects of the return of people to New Orleans.

7. Honeybees and Ice Cream. Suppose the decline of bee colonies increases the prices of some ingredients used to produce ice cream. Consider two flavors of ice cream, strawberry and vanilla. The cost of producing strawberry ice cream increases by 20 percent, while the cost of producing vanilla ice cream increases by only 5 percent. Use a supply demand graph to show the implications for the equilibrium prices and quantities of the two flavors of ice cream.

8. Cruise Ship Berths. Consider the change in the equilibrium quantity shown in Figure Draw a new graph (with a decrease in demand and an increase in supply) such that the equilibrium quantity (the number of passengers) decreases. What is the fundamental difference between your graph and Figure?

9. Artificial versus Natural Vanilla. An artificial alternative to natural vanilla is cheaper to produce but doesn’t taste as good. Suppose the makers of artificial vanilla discover a new recipe that improves its taste. Use a demand and supply graph to show the effects on the equilibrium price and quantity of natural vanilla.
10. Drought and Rice Prices. Consider the market for rice. Use a demand and supply graph to illustrate the following statement: The drought was a major factor in a near doubling of rice prices.

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