Problem 1: Demonstrate, using supply and demand analysis, the impact on the equilibrium price and quantity of new Hybrid automobiles when the following occurs. Using graphs, describe the change in the equilibrium price and quantity, and explain your answer. Is the equilibrium price higher, lower, or is the change indeterminate?
a. Incomes increase
b. Interest rates decrease
c. The price of batteries used in the production of these vehicles decreases.
Problem 2: Determine if the demand for the following products is price elastic or price inelastic, and explain your answer;
a. Box of cereal sold in a grocery store
b. Gasoline as a commodity
c. Gasoline sold at a local gasoline station
d. Hotel rooms for people on business to meet an important client
Problem 3: Describe the relationship between technology, productivity, and costs. How has your firm used technology? What was the impact on productivity, costs, and profits?