EC 202: Principles of Microeconomics

Answer the following questions properly with explanations.

1)These problems are based on Chapter 4 Problems.For each question below, use a supply-and-demand diagram to show the effects of the following events on (i) demand, (ii) supply, (iii) equilibrium price, and (iv) equilibrium quantity.

a)A cold snap hit Florida and many of the citrus trees fail to produce a crop this year.If all fruits are substitutes, what is the effect on the market for apples?

b)People decide to have less children and have smaller families. What happens to the market for minivans?

c)Unexpected cold weather sweeps through the Midwest and much of the country. What happens to the market for sweatshirts?

2)Chapter 4 Problems and Applications 8 (Hint: You do not need to create the graph electronically, instead sketch it out on a piece of paper. Take a picture of your graph and insert it into your homework assignment file before submitting.)

3)Assume a market is characterized by the equations in each part of this question. Solve for the equilibrium price and equilibrium quantity in each questionandsketch each mark. (Hint: These are questions from the market equilibrium supplemental questions.)

a)Demand:P = 50 - Q_DandSupply:P = 5 + Qs

b)Demand:Q_D= 35 - PandSupply:Qs = 0.5P - 7