QUE:

Prices of Salmon (USD) Quantity Demanded of Salmon (lb) Quantity Supplied of Salmon (lb)

5 2.25 3.75

4 2.50 3.50

3 3.00 3.00

2 4.00 2.00

1 5.50 0.50

a)Draw the demand and supply curves for the above market.

b)Determine the market equilibrium quantity and price.

c)If the market price is USD 5, what problem might arise in this market? What effect does the above problem have on the price of the Salmon?

d)Suppose that the government intervenes in this market and maximizes the price of chicken at USD 2. Estimate the amount of excess demand caused by the price ceilings.

e)Using appropriate diagrams, of demand and supply, describe the effect of the following events on the market equilibrium of salmon. (Use a different diagram for each event)

i)Increased marketing of salmon as a heathier alternative to beef

ii)Introduction of subsidy by the government on all salmon sold

Simultaneous reduction of income tax and tax on sale of chicken due to COVID-19 pandemic.