I The Market for Battery-Operated Dancing Flowers For each event listed below, indicate whether it affects the demand or supply of battery-operated dancing flowers and the direction (increase or decrease) of the change. Also indicate what will happen to equilibrium price and quantity. Remember, the determinants of demand are income, tastes, prices of related goods or services, consumers’ expectations, and the number of buyers. The determinants of supply are prices of resources, changes in technology or productivity, producers’

expectations, number of producers, and prices of related goods or services (goods that are substitutes or complements in production).

a. There is a change in tastes toward batteryoperated dancing gorillas.

b. The price of plastic falls.

c. A technological breakthrough makes it cheaper to produce plastic flowers.

d. Consumers’ incomes rise.

e. The price of battery-operated dancing gorillas rises.

f. The price of plastic for making flowers skyrockets.

g. A fire destroys a major production facility for dancing flowers.

h. Consumers expect lower prices for dancing flowers in the future.

Demand Supply Price Quantity a.

b.

c.

d.

e.

f.

g.

h.

Use the following table to answer questions 16 through 19.

Price Quantity Demanded Quantity Supplied

$0 24 0 1 20 2 2 16 4 3 12 6 4 8 8 5 4 10 6 0 12 16 The equilibrium price is .

17 The equilibrium quantity is .

18 If the price is $2, a of units will develop, causing the price to .

19 If the price is $5, a of units will develop, causing the price to .

Exercises and Applications I The Market for Battery-Operated Dancing Flowers For each event listed below, indicate whether it affects the demand or supply of battery-operated dancing flowers and the direction (increase or decrease) of the change. Also indicate what will happen to equilibrium price and quantity. Remember, the determinants of demand are income,