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The question is in the picture. (40 points) Tomatoes Consider a market for tomatoes that is currently in equilibrium. (at) (b) (d) (10 points) Imagine

The question is in the picture.

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(40 points) Tomatoes Consider a market for tomatoes that is currently in equilibrium. (at) (b) (d) (10 points) Imagine that the price of lettuce increase, assume that lettuce and tomatoes are complements. Identify graphically if there is a market shortage or a surplus, before the market reaches the new equilibrium and show the effect on the equilibrium price and quantity of tomatoes. (10 points) At the new equilibrium price, the government introduces a price ceiling (maximum price) that is below the equilibrium price. Will there be a shortage or a surplus as a result of this policy? (Explain and show graphically) (10 points) Will the effect of the policy from part (b) make tomato growers better-off or worse-off? (Explain and show graphically) (10 points) Imagine that simultaneously, there is a drought, making farming tomatoes harder, and the income of consumers increase. Assuming that tomatoes are normal goods, identify the nal effect on the equilibrium price and quantity of these changes. (You don't need to make a gmph for this part)

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