Question 1 (25 Points). Supply and Demand: A. Use supply and demand diagrams to show how the equilibrium price and quantity of smartphones is affected by the following changes in market conditions. a A recession hits the economy and consumer demand for smartphones decreases. u The price of tablets, a substitute for smartphones, increases. a The economy is booming and as a result consumer incomes increase. At the same time, an improvement in the production process reduces the manufacturing costs of smartphones. - New medical reports indicate that the health risks associated with ex cessive use of smartphones are higher than previously thought. B. Use supply and demand diagrams to discuss the effect of a minimum wage on (2') employment, and (ii) the distribution of market surplus. Recall that in the labor market the demand comes from rms (they want to buy labOr) and the supply side are the workers (they want to sell labor)