Shown on the table below is the demand and supply schedule for gums.

Price (cents per pack)	Quantity Demanded (millions of packs a week)	Quantity Supplied (millions of packs a week)
20	180	60
30	160	80
40	140	100
50	120	120
60	100	140
70	80	160
80	60	180

Answer the following questions: (Please show solution)

1. What are the equilibrium price and equilibrium quantity of gum?

2. If gum was 70 cents a pack, describe the situation in the gum market and explain what would happen to the price of gum.

3.If gum was 40 cents a pack, describe the situation in the gum market and explain what would happen to the price of gum.

4. Suppose that a fire destroys some gum-producing factories and the supply of gum decreases by 40 million packs a week.

a. Has there been a a shift in or movement along the supply curve of gum?

b. Has there been a shift in or movement along the demand curve for gum?

c. What is the new equilibrium price and equilibrium quantity of gum?

5. Suppose that a new technology has been developed causing an increase in the supply of gums by 20 million packs per week. a. Has there been a a shift in or movement along the supply curve of gum?

b. Has there been a shift in or movement along the demand curve for gum?

c. What is the new equilibrium price and equilibrium quantity of gum?

2. Indicate in each case whether the supply of beer will increase, decrease, or remain unchanged.

Beer decreases in price
Hops, an important ingredient in brewing, experience an excellent harvest, causing hop prices to fall.
Wine coolers become more popular to the consumers.
Fuel costs rise in the brewery.
Costs of transportation fall
The price of beer bottles increased.
The economy enters a recession and many beer drinkers become unemployed.
Improved technology resulting in less wastage of beer.
The government imposes a new tax on beer producers.
Beer workers successfully increase wages.

3. A change in quantity supplied of a good is directly brought about by a:

Select one:

a.

decrease in income

b.

fall in the price of resources needed to produce the good

c.

technological advance

d.

change in the good's own price