Question

1.)Diagram the effect on the lumber market when it is being impacted by the slowdown in home and other construction. It is also facing increased costs for labor and equipment. Label and title completely.

2.) Diagram the effect on the corn market when grain storage capacity in the United States is almost maxed out. Label and title completely.

3,)Given the following two estimates for supply and demand, solve for the market equilibrium price and quantity. Be sure to show all work.

a. Demand: Q = 890 - P

b. Supply: Q = 50 + 3P

Answer 1

1. When there is an increase in the cost of labor and equipment, that has an impact on the demand for home and construction. also, there is an impact on the lumbar market. Now the lumber market is directly dependent on the construction and home equipment and other when the core requirements cost increased the demand for home and construction also decreased. in the figure, the initial cost price and quantity were P* and Q* but after an increase in price, the demand for home and construction decreased with increased price.

2. When there is saturation in storage in US corn market then there is a heavy flow of corn in the market and that leads to a decrease in price and increase in quantity. so in the figure after saturation, the supply of corn increased and the price of corn decreased from P* to P1 and quantity has increased from Q* to Q1.

3. Q=890-P, Q=50+3P

Equilibrium of demand and supply= Demand = Supply

890-P=50+3P

=> 4P=840

P=210, Q=890-210=680

So equilibrium price=210, Q=680