1) Evaluate the following statements: "A warmer than usual winter produced an abundance of oranges in Florida. This is an increase in supply which will reduce prices. The reduced prices will lead to an increase in demand which will push prices back up. Overall, the price of oranges will be relatively unchanged."
2) In recent years, Detroit shut off water to some city residents because of unpaid bills. Those opposed to these shut offs, including the United Nations, claim that city tap water is a public good. Evaluate this claim.
3) A local taxi-owner's union is meeting to decide whether to raise the minimum ride price from $5 to $6. This price is the flat rate any rider pays who travels less than 2 miles. An economist at the meeting tells the group that studies have shown that short-trip rides have an elastic demand. What will happen to taxi revenues if the increase in the price floor is adopted and why? (the explanation is what counts here).
4) In the 1980s, there were far fewer apple varieties than there are available today. In the early 1990s, researchers at the University of Minnesota patented the seeds for the now-popular Honeycrisp apple variety they bred. As that patent nears expiration, explain how this market will change. Explain what type of market structure the Honeycrisp was in in 2001. Were long run profits possible? Why or why not? What type of market structure will the Honeycrisp apple be in in 2016 when the patent will have expired? Are long run profits possible? Why or why not?