Demand and Supply Shifts

List two changes that would cause demand for bottled water to increase, and one that would cause it to decrease (examples should be unrelated to each other). Quickly state in which direction price and quantity would shift for each of those situations.

On a graph, show what happens to equilibrium price and quantity when supply for bottled water decreases.

Suppose that from the original equilibrium, demand increases, but price temporarily remains at the previous equilibrium price. Show this situation on a graph, including current quantity demanded and quantity supplied. Describe how the actions of buyers and sellers cause the price to move toward the new equilibrium.

Suppose in the situation in part (c) that the government had a policy that stopped the price of bottled water from increasing. Describe one possible method for rationing bottled water under these circumstances, and possible pros and cons of that method.