Reference no: EM131755502

ASSIGNMENT -

1. Illustrate each of the following events using a demand and supply diagram for bananas.

a. Reports surface hat imported bananas are infected with a deadly virus.

b. Consumers' incomes drop.

c. The price of bananas rises

d. The price of oranges falls.

e. Consumers expect the price of bananas to decrease in the future.

2. Answer true or false. If false, change it to make it true. Illustrate your answer on a demand and supply graph.

a. An increase in demand is represented by a movement up the demand curve.

b. An increase in supply is represented by a movement up the supply curve.

c. An increase in demand without an changes in supply will cause the price to rise.

d. An increase in supply without any changes in demand will cause the price to rise.

3. Using the following schedule, define equilibrium price and quantity. Describe the situation at a price of $10. What will occur? Describe the situation at a price of $2. What will occur?

Price	Quantity Demanded	Quantity Supplied
$1	500	100
2	400	120
3	350	150
4	320	200
5	300	300
6	275	410
7	260	500
8	230	650
9	200	800
10	150	975

4. Suppose the government imposed a minimum price of $7 in the schedule of exercise 3. What would occur?

5. In exercise 3, indicate what the price would have to be to represent an effective price ceiling. Point out the surplus or shortage that results. Illustrate a price floor and provide an example of a price floor.