Economics Assignment
Students are required to answer all the questions and sub-questions of the assignment. Show all your work - graphs, formulas, and calculations (wherever necessary) to receive full credit. Just showing the final answer to a question will lead to a grade of zero.
I. Consider the market for coffee.
1. Draw the supply and demand graph for coffee below assuming the market operates at an equilibrium price of $2.40 and an equilibrium quantity of 5,000.
2. Assuming tea and coffee are substitutes, what will happen in the market for coffee if the price of tea increases? Show the effects on your market.
3. Based on this information, will producer surplus in the market for coffee increase or decrease? Explain.
II. Consider the market for basketball sneakers, which is drawn below. Answer each of the following questions.
1. If this market operates at equilibrium, what areas represent the consumer surplus that will occur?
2. If this market operates at a price of $61, how many units will producers sell?
3. If the price is $260, how many units will be produced, but not actually sold?
4. If this market operates at a price of $80, what areas represent the producer surplus that will occur?
5. If this market operates at a price of $80, what areas represent the consumer surplus that will occur?
6. Now, suppose the government requires that all units sold in the market must be sold at a price of $400. How many consumer surplus will occur given this new market price?
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.