1. Suppose during 2003/04 the number of cars sold in Bahrain increases despite an increase in cars prices. How can this be explained? D while S remained constant.

2. Because of health awareness many people reduces their consumption of animal oil and increase their consumption of vegetable oil to reduce cholesterol problems. What will happen to equilibrium price and equilibrium quantity of both products?

3. Suppose you have the following data about the price, quantity demanded and, quantity supplied of a specific good

P Qd Qs

570 0

10 55 20

15 40 40

20 25 60

25 10 80

a. What is the equilibrium price and quantity?

b. Is there a surplus or shortage when P = 10? Why?

c. Is there a surplus or shortage when P = 20? Why?

d. What is the highest price at which buyers are willing and able to buy 55 units?

e. What is the minimum price at which sellers are willing and able to sell 60 units?

f. What will happen in the market if price ceiling of 10 was in effect?

g. What will happen to demand curve, supply curve and Equilibrium Price and Equilibrium Quantity if there is

i. An increase in the price of a substitute good

ii. A decrease in consumers' income

iii. An increase in the cost of factors of production

h. Suppose a new technology has been discovered to reduce the cost of the good, but the demand for this good has decreased because of a new substitute. What is the impact on equilibrium price & quantity, other things remain the same?

i. Suppose some unfavorable conditions severely affected the supply of this good while its demand increased because of the decrease in the price of a complement, what will happen to equilibrium price & quantity ?