Section B 1. Smart phones are becoming less expensive as new technology reduces the cost of production. In a supply and demand model, explain the effects of the technological innovations and their effect on the quantity of smart phones. 2. Refer to Table 2 and answer the following question. Price Quantity demanded (dollars per pound of cat Quantity supplied (tons of cat food per year) food) (tons of cat food per year) 52 1.00 15 46 1.50 26 43 2.00 34 40 2.50 40 35 3.00 44 Table 2 a) The above table gives the demand and supply schedules for cat food. If the price is $3.00 per pound of cat food, will there be a shortage, a surplus, or is this price the equilibrium price? If there is a shortage, how much is the shortage? If there is a surplus, how much is the surplus? If $3.00 is the equilibrium price, what is the equilibrium quantity? b) The above table gives the demand and supply schedules for cat food. If the price is $1.00 per pound of cat food, will there be a shortage, a surplus, or is this price the equilibrium price? If there is a shortage, how much is the shortage? If there is a surplus, how much is the surplus? If $3.00 is the equilibrium price, what is the equilibrium quantity? c) The above table gives the demand and supply schedules for cat food. What is the equilibrium price and quantity? d) The above table gives the demand and supply schedules for cat food. If the supply increases by 20 tons at every price, what is the new equilibrium price and quantity