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Supply and Demand

1. (18 points) Suppose that the market for home computers is in equilibrium.Determine how the following

unexpected events, called shocks, will affect the equilibrium price and quantity.Draw a supply and demand

diagram to illustrate each answer.All curves must be appropriately labelled.Any curves that shift should

be labelled appropriately so that the direction of the shift is apparent.If no curves shift, indicate 'No Shift'

beneath the diagram.(Be Advised:Economists rarely ask questions for which 'No Effect' is the answer.)

1. Computers become easier for children to use.
2. The price of computer components, e.g. DRAM memory chips falls.
3. Software prices fall.
4. All college students in China are required to own personal computers.
5. The price of electricity rises substantially.
6. Doctors warn of health risks from radiation from video monitors.