Peter's Pizza Palace produces pizza in a small city north of Toronto. The restaurant's demand and supply schedules are shown below...

Price.....................................Quantity Demanded (Qd)............................Quantity Supplied (Qs)

($/pizza) Per week Per week

$10.......................................................0.............................................................900

9.50....................................................100...........................................................850

9.00.....................................................200..........................................................800

8.50.....................................................300..........................................................750

8.00.....................................................400..........................................................700

7.50.....................................................500..........................................................650

7.00.....................................................600..........................................................600

6.50.....................................................700..........................................................550

6.00.....................................................800..........................................................500

5.50.....................................................900..........................................................450

5.00.....................................................1000........................................................400

Questions:

(a) Draw a diagram of the market for Peter's Pizza using the demand/supply schedules provided...(2 marks)

(b) What is the equilibrium price and quantity of pizzas in this market? (2 marks)

(c) Suppose that Peter sets the price of his pizzas at $6 per pizza. What is the condition of the market at this price? Explain how the market will adjust, as a result...(3 marks)

(d) Suppose that each of the following changes take place in the market for "Peter's Pizza" . Draw a separate diagram in each case, showing whether each change will affect either the demand or supply side of the market. Also illustrate the effect on equilibrium price and quantity...

(i) Christine's Pizza Place, two streets over, has a sale on her pizzas (all else equal) (2 marks)

(ii) The price of flour, used to make pizza, increases (all else equal) (2 marks)

(iii) There is a decrease in the price of Coca Cola, a complement for pizza (all else equal) (2 marks)

(iv) Peter acquires a new oven which allows him to bake pizza faster (all else equal) (2 marks)

(v) There is a decrease in the price of Peter's Pizza (all else equal) (2 marks)