Answer all parts to this question.

Part i)Determine the impact of each of the following events on the market for the products below shown in italics. For each event show the impact on the Demand or the Supply, Equilibrium Price and the Equilibrium Quantity (i.e. increase or decrease,or no change in Demand or Supply, increase or decrease in equilibrium price and equilibrium quantity or indeterminate).Also, explain which determinant of demand or supply is causing the change.(6.5 marks)

• Organic food. Consumer concerns over Genetically Modified food

• New Cars. The economy recovers from a recession.

• Coffee beans. Unusually cold weather in Central and South America destroys some of the crop andcoffee consumption is proven to help prevent certain cancers.

Part ii)The following table sets the demandand supply schedules for gum (3.5 marks)

Price (cents pergum) Quantity Demanded(packs/week) Quantity Supplied(packs/week)

20 180 60

40 140 80

60 90 90

80 60 120

a)If the price of gum is 40cents a pack, describe the situation in the gum market. Explain how the price adjusts.

b)If the price of gum80cents a pack, describe the situation in the gum market. Explain how the price adjusts.

c) What is the market equilibrium ?

d) Which one of these prices is an example of a price floor? If this price floor is imposed by the government, what would be the consequence for this market?