19246 (9 E El} 0 \";'I2'TE'l .III .I 510/015 6 PW.\" EC01006F 2023...utoria| 3 (1).pdf Readonly 4- c?) 2 Tutorial 3 40 marks Ehi Idoko Due Monday March 6, 2023 by 12 noon Part A [10 marks. 2 marks each] Please indicate whether you think each of the following statements is true orfalse. If you think the statement is false, you briefly need to explain why. Between 2020 and 2022, the equilibrium price of Whiteboards remained constant but the equilibrium quantity increased. From this, we can conclude that the supply of Whiteboards increased while the demand decreased. A rise in income will lead to a rightward shift in the demand curve of an inferior good. A deficit arises when the price is above the equilibrium price. Market clearing price is the price at which quantity demanded is equal to quantity supplied. 5. A firm raises the price it charges. The firm's total revenue does not change. This means that demand is perfectly elastic. Part B [30 Marks] 1. For each of the following scenarios (all based on real-world events), use a supply and demand diagram to illustrate the effect of the given shock on the equilibrium price and quantity in the specified competitive market. Explain whether there is a shift in the demand curve, the supply curve, or neither. Be sure to label all axes and shifts and the new quantity and price arrived at. You may assume that the quantity of a particular good is given per year. 1.1 OPEC (the Organisation for Petroleum Exporting Countries) agrees, once again on higher output quotas. [5 marks] 1.2 Oil prices rise as demand from China and India continue to grow. [5 marks] 1.3 Petrol prices rise as hurricane cuts production on the US gulf coast. [5 marks] 2. Suppose you know that consumers incomes have increased, and that an advancement in technology has lowered the cost of making computers. Assuming that a computer is a normal good, what will happen to the equilibrium price and quantity of computers as a result of these two simultaneous changes? Draw a diagram to support your answer [10 marks] 3. Due to a fall in input costs, Starbucks reduced the price of their latte by 8 percent, and this resulted in a 21 percent increase in quantity demanded. What is the price elasticity of demand? What is the implication of this number and based on that, what advice will you give to the manager of Starbucks? [5 marks] I\" C) <