You are associated with a corrupt broker in Philadelphia. The broker has paid for tomorrow's orange juice report, which reports on the crop conditions in florida. The report will be released @ 10 am tomorrow. The market demand and supply curve that exist now, and at the opening of the market, tomorrow, at 9 am are:

a) The equation for the market demand for oj is P = 230 - .5 Q

b) The equation for the market supply for oj is P = 80 + .5 Q.

If the crop is damaged, it will change the slope of the appropriate curve by 1/10 for every 10% of damage: so, for example 30% of damage will change the slope of the appropriate curve from .5 to .8, this is the only effect on the curves.

Your boss has a copy of an erroneous report that says 20%of the crop is damaged, importantly, he does not know this is an erroneous report, he bribed an official for this report, and the official, maliciously gave him erroneous data. He is operating under the assumption that he has the correct report, and only he has it. The following day, the market opens unchanged (using the equations above at $155, you do not need to derive this) at 9 am (before the report). Will your boss be a buyer or seller? Assume that onlyyour boss's actions will move the price. AND, that the price that exists just before 10 am, the release of the report, is the result of your boss's illicit buying (or selling), AND all of your boss's transactions occur at that price. When the actual report is released at 10 am (ceteris paribus), and your boss has pushed the market to the level he expects due to the fictitious crop report, and the market price will return, violently, to its 9 am equilibrium, what will happen to your boss's position, will it be a profit or loss if liquidated immediately?

2 pts on whether this will be profit or loss

3 pts for deciding whether your corrupt boss is a buyer or seller provide a reason why

2 pts for your opinion on whether crime pays in this case, provide a reason why.

So in order to solve this problem, you will need to know which curve, demand, supply, both, neither, moves, if at all, as a result of the crop damage. Then, what effect will that have on your boss's expectations for price...and the result. Good luck.