Demand and Supply

Part 4. Consider the market for van. For each of the events listed here, 1. identify which of the determinants of demand or supply are affected. Also indicate whether demand or supply increases or decreases. Then, 2. draw a diagram to show the effect on the price and quantity of vans. 3. People decide to have more children. b. A strike by steelworkers raises steel prices. C. Engineers develop new automated machinery for the production of vans. d. The price of sports utility vehicles rises. e. A stock-market crash lowers people's wealth. Part 5. Using supply-and-demand diagrams, show the effect of the following events on the market for sweatshirts. A. A typhoon in Province A (whether raw material for sweatshirts are produced) damages the cotton crop. B. The price of leather jackets falls. C. All colleges require morning exercise in appropriate attire. D. New knitting machines are invented. Part 6. Consider the following events: Scientists reveal that consumption of oranges decreases the risks of diabetes, and at the same time, farmers use a new fertilizer that makes orange trees more productive. Illustrate and explain what effect these changes have on the equilibrium price and quantity of oranges. Part 7. The government has decided that the free-market price of coconut too low. a. Suppose the government imposes a binding price floor in the coconut market. Draw a supply- and-demand diagram to show the effect of this policy on the price of coconut and the quantity of coconut sold. Is there a shortage or supply of coconuts? b. Farmers complain that the price floor has reduced their total revenue. Is this possible? Explain. C. In response to farmers' complaints, the government agrees to purchase all the surplus coconuts at the price floor. Compared to the basic price floor, who benefits from this new policy? Who loses? Explain briefly.Part 8. Figure A. Deriving Sarah's Demand Curve packs per day) 8 K 4 C 2 6 Water (bottles/day) (a) Change in consumer equilibrium Where: at point C-best affordable point where water is $1 a bottle At point K - best affordable point where water is $0.50 a bottle Required: Given this figure above, draw the DEMAND FOR WATER (bottles per day) below Figure A