Part i) Determine the impact of each of the following events on the market for beef. (6.5 marks)

For each event show the impact on the Demand or the Supply, Equilibrium Price and the Equilibrium Quantity (i.e. increase or decrease or no change in Demand or Supply, increase or decrease in equilibrium price and equilibrium quantity or indeterminate). Also, explain which determinant of demand or supply is causing the change.

A) Consumers expect the price of beef to increase in the near future.

B) Consumer incomes have decreased and beef is considered a normal product.

C) Highly credible new research results report that abundant consumption of fatty red meat such as beef actually decreases average life expectancy andcost of the feed for cows has decreased substantially.

Part ii) The following table shows the demand and supply of bottles of premium olive oil for Country ABC. (3.5 marks)

Price Quantity Demanded Quantity Supplied

1.00 18 3

2.00 16 6

3.00 14 9

4.00 12 12

5.00 10 15

6.00 8 15

7.00 6 21

a) If the price of olive oil is $2, describe the situation in the olive oil market. Explain how the price adjusts.

b) If the price is $6, describe the situation in the olive oil market. Explain how the price adjusts.

c) What is the market equilibrium in this market?

d) Which one of these prices is an example of a price ceiling? If this price ceiling is imposed by the government, what would be the consequence for this market? Explain.