Assuming a normal market, with a positively sloped supply and negatively sloped demand, which is initially in equilibrium. Given the situation stated below, fill in the blanks matching the effect as either: increase, decrease, no change or indeterminate (cannot determine).

Market for IBM computers

Technology improves for the production of IBM computers, and consumers preferences for Apple computersincreases due to Apple's unique application programs

(a)Supply will

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decrease

increase

not change

is indeterminate (unable to determine)

(b)Demand will

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decrease

is indeterminate (cannot determine)

increase

not change

(c)Equilibrium price will

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increase

not change

be indeterminate (unable to determine)

decrease

(d)Equilibrium quantity will

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not change

be indeterminate (unable to determine)

increase

decrease

new question:

Suppose you are selling t-shirts at your own t-shirt stand. The supply and demand curves for t-shirts are given below.

P= 7 + 0.1QP=30- 0.2Q

a.Whatis the equilibriumquantityfor t-shirt

b.What is the equilibriumprice for t-shirts?

c.If the process of making your t-shirts results in chemical waste that you dump in a nearby stream, creating $ 6 worth of damage to the environment per shirt, what is the socially optimal number of t-shirts for you to sell?

d.Given the chemical waste in part c., what is the socially optimal p

e.What tax policy could the government use to assure that you sell the socially optimal number of t-shirts?

Tax t-shirts equal to 6 dollars

Subsidize t-shirts equal to 6 dollars

Tax t-shirts more than 6 dollars

Subsidize t-shirts more than 6 dollars

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