Question 1 For each of these situations for part a, b, c, answer what happens to the list below. (increase, decrease, no change) with all other things constant. In addition draw the necessary Demand and Supply graph and show the shifts. Label all points on the graphs clearly.

i) demand, ii) supply, iii) equilibrium price iv) equilibrium quantity v) Quantity Demanded vi) Quantity Supplied.

a. How will a decrease in supply of Coffee affect the market for Coffee and Tea market? Assume substitute products. You need to show two markets, with two sets of the list. (10 points)?

b. How will an increase in cost of steel used in making bicycles affect the market for bicycles?

c. How will an expectation of an increase in the future price of silver affect the current market for silver?

Question 2 The government has imposed an effective price control of $1000. The equilibrium price for this market is $2000?

a. Name and Define this type of price control?

b. Draw the market (demand and supply) for this market and show the price control. Explain what happens to D, S Ep, Eq, Qd and Qs

c. What are the consequences of this price control

Question 4 : Elasticity question

a. The current market price for a widget is $350 and quantity demanded at that price is 200 for textbooks. If price increases to $650, and quantity demanded decreased to 120. How much is the price elasticity of demand? At this price change is it the elastic, inelastic or unit elastic, and why?

b. Given the information on the price elasticity of demand of textbook, what happens to total revenue for this market for the increase in price from $350 to $650, and why.