1. For each of the following scenarios, use a supply and demand diagram to illustrate the effect of the given shock on the equilibrium price and quantity in the specified competitive market. Explain whether there is a shift in the demand curve, the supply curve, both or neither.

i. What is the effect of the Covid-19 pandemic on the hand sanitizer market in United Kingdom?

ii. The government introduces a subsidy on hand sanitizers which is paid by producers. What is the effect in the hand sanitizer market?

iii. Scotland and France are major producers of fish. Brexit has reduced fish produced in Scotland and sold in Europe. Show the effect on the market for French fish in Europe.

#2. If demand for clothing is described by the equation QD = 200 - 10p, and supply is QS = 80 + 5p.

a.) Find the equilibrium price and quantity?

b.) What is the price elasticity of demand at the equilibrium price?

c.) How would your answer change if a decrease in consumer income because of Covid-19 shifted the

demand curve to QD = 140 - 10p? That is, find the new equilibrium price and quantity. Does the price

elasticity of demand change at the new equilibrium price?

d.) Show your initial and new equilibrium on a graph and provide a brief explanation.

#3. If demand for football tickets is described by the equation QD = 100 - p, and supply is QS = 20 + p

a.) Find the equilibrium price and quantity.

b.) A friend of yours said, "price elasticity for the football tickets is inelastic at the equilibrium price". Is

your friend, right?

c. ) How would your answer change if the supply curve shifted to QS1 = 10 + p due to increases in player

salaries?

Are predictions using the supply and demand model likely to be reliable in each of the following markets? Why or why not?

a. Apples

b. Convenience stores

c. Electronic games (a market with three major firms)

d. Used Cars