(12) Explain what would happen in the following markets given the following demand or supply shocks. In your answer clearly state what happened to supply or demand (whether it increased or decreased) and what would likely happen to the equilibrium price and quantity as a result, other factors constant.

A) Market: Grapes. Shock: A major scientific study suggests that individuals who regularly consume grapes live on average five years longer and have a reduced risk of Alzheimers disease.

B) Market: Electric vehicles. Shock: There is a significant decrease in the price of U.S. semiconductors, which are used as an input in the production of electric vehicles.

C) Market: Used cars. Shock: There is a significant decrease in the price of new cars, which are a substitute of used cars.

D) Market: Eggs. Shock: The avian flu leads to a significant reduction in the number of egg laying hens.

2. (11) Suppose the estimated supply function for avocados is given by Q_S = 48 + 15p 10p_f , where p_f is the price of fertilizer. The estimated demand for avocados is given by Q_d = 233 - 40p + 5p_t , where p_t is the price of tomatoes per pound.

a . (3) Solve for the initial equilibrium price and quantity of avocados if the price of fertilizer, p_f ,is equal to $0.35 per lb. and price of tomatoes, p_t, is equal to $0.80 per lb.

b. (3) Solve for the new equilibrium price and quantity of avocados if the price of fertilizer, p_f , increases to $0.90 per lb. and price of tomatoes, p_t, remains $0.80 per lb.

c. (3) Use these equilibrium values from parts a. and b. to solve for the price elasticity of demand for avocados.

d. (2) Given your calculations, are avocados elastic, inelastic or unit-elastic? Have total expenditures on avocados increased, decreased, or not changed as a result of the change in the price of fertilizer?