Question

Building the Supply and Demand Model Homework

1. Explain the difference between a change in the quantity demanded (Q_d) and demand (D).

A change in quantity demanded refers to a movement along the demand curve, which is caused only by a chance in price. A change in demand means that the entire demand curve shifts either left or right.

2. Explain the difference between a change in the quantity supplied (Q_s) and supply (S).

A change in quantity supplied will imply a movement along the supply curve, while a change in supply refers to a shift in the supply curve. A change in quantity supplied is usually caused by a change in the unit price while a change in supply is caused by new methods of production.

3.

Broccoli Soup (per month)
Price	Kwame	Maria	Elsa	Market Demand
$2	4	18	22
4	3	14	21
6	0	11	20
8	0	5	15
10	0	2	7
12	0	1	4
14	0	0	2
16	0	0	1

A. Using the individual demand data in the table above, determine the market demand for broccoli soup – fill in the market demand column of the table.

B. Graph the market demand curve.

C. The broccoli growers industry group launches a successful national marketing campaign highlighting the positive health effects of broccoli consumption. What will likely happen to the market demand for broccoli? Demonstrate your answer in the graph you drew for B.

4. Give 3 real world scenarios that would likely increase the demand for chickpeas.

5. Give 3 real work scenarios that would likely decrease the supply of Atlantic salmon.

6. Draw hypothetical supply and demand curves for coffee. Show how the equilibrium price and quantity will be affected by the following events. Use a separate graph to demonstrate each event. Show the equilibrium price and quantity before, and after, the event.

A. The New England Journal of Medicine publishes an article highlighting a direct correlation between coffee consumption and liver cancer.

B. The coffee growing regions of South and Central America experience optimal coffee growing weather.

C. A regional war breaks out in the coffee growing countries of East Africa.

D. Widespread media reports highlight major labor abuses in coffee growing regions around the world, including child labor, slave labor, and the widespread sexual assault of coffee plantation workers.

7. President Trump signs a law that imposes a 30% tax on oil exports from the United States.

A. Demonstrate the likely effect on the domestic oil market using supply and demand curves.

B. What we will be the likely effect on oil prices in the US?

8. Assume the individual demand and supply below represent the entire market. Answer the questions based on the following tables.

Tasting Menus Michelin Star Restaurants, Chicago (Demand Schedule - per month)
Price	Omar	Shelia	Aliyah	Market Demand
100	9	14	23
150	5	10	18
200	4	8	16
250	0	3	10

Tasting Menus Michelin Star Restaurants, Chicago (Supply Schedule - per month)
Price	Grace	Alinea	Acadia	Market Supply
100	0	2	9
150	4	4	10
200	7	10	11
250	13	15	24

A. Draw the market demand and market supply curves.

B. Label the market equilibrium price and quantity.

C. What is the excess quantity supplied at a price of $250?

D. What is the excess quantity demanded at a price of $150?

9. Explain the likely affect of the following events on the market equilibrium price and quantity:

A. Global soybean market: An infestation of the Helicoverpa armigera worm in Brazil’s soybean growing regions. Brazil is the world’s largest producer of soybeans.

B. Global toy market: A 105% increase in the minimum wage in China. China is the world’s largest manufacturer of toys.

C. Global pineapple market: Both PepsiCo and the Coca Cola company develop blockbuster pineapple flavored sodas.

D. US energy drink market: Congress imposes a 25% excise tax on energy drinks due to the adverse health effects of excessive caffeine consumption. The excise tax will be paid by the manufacturers of the drinks.

E. Local Sinha Stout (popular Sri Lankan beer) market in Poughkeepsie: Four thousand Sri Lankan immigrants settle in the city of Poughkeepsie.

F. Horn rimmed glasses local market Hyde Park: Hyde Park becomes a popular location for weekend homes for Brooklyn hipsters.

G. Fuji apple market: The price of red delicious apples increases by 67%.

H. Chef’s knife market: The demand for culinary education increases dramatically.

J. Kiwi market: Kiwi sellers raise the price of kiwis by 29%. There are no other changes in the market.

K. Wheat market: A new technology significantly increases planting productivity.

Answer 1

A. Using the individual demand data in the table above, determine the market demand for broccoli soup – fill in the market demand column of the table.

Ans:

Broccoli Soup (per month)Price	Kwame	Maria	Elsa	Market Demand
$2	4	18	22	44
4	3	14	21	38
6	0	11	20	31
8	0	5	15	20
10	0	2	7	9
12	0	1	4	5
14	0	0	2	2
16	0	0	1	1

Market Demand nothing but a summation of individual demand of Kwame, Maria & Elsa.

B. Graph the market demand curve.

Ans:

C. The broccoli growers industry group launches a successful national marketing campaign highlighting the positive health effects of broccoli consumption. What will likely happen to the market demand for broccoli? Demonstrate your answer in the graph you drew for B.

Ans: If the consumption is more then market demand shifted upwards so demand is increasing.

4. Give 3 real world scenarios that would likely increase the demand for chickpeas.

Ans: In the real world the chickpeas demand increses because of his nutrinational values and Asia is the largest producers of Chickpeas and it constitutes 80% of production . Below graph is the time series graphical representation of chickpeas yield and source is adopted from Food and Agriculture Organization (FAO) (2019)

Source: Food and Agriculture Organization (FAO) (2019)

Source: Food and Agriculture Organization (FAO) (2019)

The above three graph represents how the chickpeas demand and consumption increases in a time series wise and countries wise .