If someone tried to sell you a dollar for any price above a dollar, you wouldcertainly turn the person down. But at a price of exactly $1, you’d be willing tobuy any number of them, since they’re each worth exactly $1 to you. With this inmind, draw your individual demand curve for dollars.

B. Your Aunt Debby has come to you offering to pay you if you make large signs toadvertise her business. The materials for each sign cost $20, and you must spendyour own time painting them. Make your own supply schedule, thinking about the value of your own time and the price you’d need to be paid for each sign tomake Q5 = l, 2, and 3 signs. Then, graph your supply curve.

C. In the market for milk, the equilibrium price is $3 per gallon. Then, to help thecountry’s dairy farmers, the government implements a price restriction, requiring the price to be at least $4. How will this shift the supply curve for milk?

D. The market for dish detergent is a competitive market, and the equilibriumpriceis P* = $2. One day, the CEO of Sally’s Soap gets an idea. She gathers together the thousands of soap producers and gets them to all agree to raise prices toP = $3.

a. When the price goes up to P = 3, will there be a shortage, a surplus, or neither?b. Will the price stay at P = 3 long term? Why or why not? The suppliers arebetter off at P = 3, so why would they not stay there?

E. Consider the market for computers. Over the past fifty years, the equilibriumquantity of computers has gone way up, and the equilibrium price has gone waydown.

a. For supply and demand, list one thing each that might have shifted them.

What direction was each shift?

b. Price went way down. Is it likely that the supply shift or the demand shift was“bigger”?

In the market for packets of cookies, demand is P = 45 — 3QD and supply isP = 5 + Q5. Then, a mass hysteria descends upon the nation and everyone simplymust have cookies now, shifting demand to P = 90 — 3QD. The change happens so fast that prices haven’t even updated yet, and it’s still at the pre-hysteria price.

How large is the shortage of cookie packets?
G. There’s a new product that’s about to be invented and sold in a competitive mar—ket: the Flooble. A little research reveals that inverse demand for the Flooble isP = 610 — QD. That same research reveals that the marginal cost to produce aFlooble is 10 at a quantity of O,and each Flooble beyond that has a marginal cost of 1 higher than the one before. Calculate the equilibrium price and quantity of Floobles.
H. You’ve probably solved for enough supply and demand equilibria to have a bit of intuition for it at this point. So, design your own set of supply and demandcurves such that the equilibrium price and quantity are both positive integers (i.e. no decimals).
Demand for land in Manhattan in square miles is given by Q0 = 65 — P, whereprice is measured in billions of dollars. However, there’s a fixed amount of landin Manhattan. In particular, it’s about 23 square miles. There can’t be any more, no matter how much money you offer. Calculate the equilibrium price and quantity of a square mile of Manhattan land. Graph supply and demand, and label theequilibrium. Then, draw a rightward shift in demand. What happens to the equilibrium? Explain why this is different than what we normally get from rightwardshifts in demand