Demand and Supply

Demand and Supply 17. A popular tradition when traveling to Hawaii is to receive a lei, a wreath of flowers to welcome guests. Although a lei can be made of flowers, leaves, nuts, or even candy and money, orchids remain the most popular flower used to create them. Suppose that supply and demand in the orchid lei market in Hawaii are represented in the table below. Quantity Quantity Price Demanded Supplied ($/unit) (thousands) (thousands) 5 24 8 10 20 12 15 16 16 20 12 20 25 8 24 a. Graph both the supply (S1) and demand (D1) curves using the table above. What is the equilibrium price? What is the equilibrium quantity? Label the equilibrium as point a. b. Assume that the Hawaiian lei industry increases its use of orchids from Thailand (where they are grown at a lower price), allowing orchid lei supply to increase by 8,000 units at every price. Illustrate the increase in the supply on your graph. Label the new supply curve (S2). What will the new equilibrium price in the market be? Label that point b. C. Now assume that luxury hotels in Hawaii begin cost-cutting measures by no longer presenting guests with a lei upon check-in, reducing orchid lei demand by 8,000 units at every price. Label the new demand curve (D2). What will the new equilibrium price be? Label this new equilibrium point c. d. Subsequently, assume that severe monsoons and civil unrest in Thailand lead to a reduction in orchid production, reducing supply back to the original curve (S1). What will the new equilibrium price be? Label this new equilibrium point d. 18. For each of the following changes in the demand or supply curves in the pizza market below, draw a graph showing the old demand or supply curves as well as the new demand or supply curve (whichever shifts). Also show how the equilibrium price and equilibrium quantity change on your graphs. Please show your work on 6 different graphs. Also, please be neat. Thanks