In the blank, write the letter corresponding to the best description of what would happen in the market for fresh, organic, California-grown vegetables in each of the following cases. Consider each event individually. Assume that the market has reached its new equilibrium. (Hint: to work out your answers and avoid mistakes, draw a graph of the market, and then shift either the supply or the demand curve in the appropriate direction.) A.Price rises and quantities sold fall B.Price rises and quantities sold rise C.Price falls and quantities sold fall D.Price falls and quantities sold rise 1._____Plentiful rains bring down the cost of irrigation. 2._____Concern for animals and the environment starts a craze for fresh vegetables. 3._____The Federal Government begins to subsidize growers of fresh, organic vegetables. 4._____A prolonged recession hurts consumers' incomes. 5._____Hand-weeding, an agricultural technique used only by organic growers, is outlawed. 6._____Importing organic, Mexican-grown vegetables is suddenly allowed. 7._____Condiments essential to the enjoyment of fresh vegetables become very expensive.

8. In which of the first five cases above (1-5) did the supply curve shift? Circle all that apply: 1 2 3 4 5 (Hint: double check whether your answer to question 8 is consistent with the effects on price and quantity that you found for Questions 1-5. This gives you a second chance to catch any mistakes.)

In the Republic of Nokoffinghir, at the current, government-mandated price of $20 per pack, the quantity of cigarettes demanded is 5 million packs and the quantity supplied is 30 million packs. Assume that a market-clearing price for cigarettes exists. For questions 9 through 12 below, circle the letter beside your answer.

9. A.The market clearing price of cigarettes is $20. B. The market clearing price of cigarettes is less than $20. C.The market clearing price of cigarettes is more than $20 . 10. A. There is currently excess demand for cigarettes. B. There is currently excess supply of cigarettes. C. Currently, there is neither excess supply nor excess demand for cigarettes. 11. If the government removes the price limit, the quantity of cigarettes supplied will rise. A.True B. False 12. The government-imposed price is a price ceiling, not a price floor. A. True B. False 13. According to the law of downward-sloping demand, if the price of a good increases, then the quantity demanded should: A. increase. B. decrease. C. remain unchanged. D. Cannot be known from the information provided.

14. The minimum wage is a price floor: A.True B. False

15. If a price floor is binding, it is most likely to lead to: A. Excess demand. B. Excess supply. C. Market equilibrium, D. Cannot be known from the information provided.