1 suppose the price elasticity of supply for new homes is

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1.) Suppose the price elasticity of supply for new homes is 0.25 in the short run and 1.05 in the long run.

a. If the average home price falls from $110,000 to $90,000, what happens to the quantity of new homes supplied in the short run?

b. How does the quantity of homes supplied change in the long run

2.) The market for corn is currently in market equilibrium. Graph this situation. On your graph show what happens to the quantity of corn and the price in the market as the use of ethanol fuels becomes more widespread at the same time that a drought destroys one-third of the corn crop.

Reference no: EM13379132

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