[Joseph_E._Stiglitz,_Carl_E._Walsh]_Economics(Bookos.org) (1)

the demand and supply curves. What is the equilibrium
price and quantity? Find a price at which excess demand
would exist and a price at which excess supply would
exist, and plot them on your diagram.
Price Demand Supply
per slice (number of slices) (number of slices)
$1 420 0
$2 210 100
$3 140 140
$4 105 160
$5 84 170
2. Suppose a severe drought hits the sugarcane crop. Predict
how this will affect the equilibrium price and quantity in
the market for sugar and the market for honey. Draw
supply and demand diagrams to illustrate your answers.
3. Imagine that a new invention allows each mine worker
to mine twice as much coal. Predict how this will affect
the equilibrium price and quantity in the market for coal
and the market for heating oil. Draw supply and demand
diagrams to illustrate your answers.
4. Americans’ tastes have shifted away from beef and
toward chicken. Predict how this change has affected
the equilibrium price and quantity in the market for
beef, the market for chicken, and the market for roadside
hamburger stands. Draw supply and demand
diagrams to illustrate your answers.
5. During the 1970s, the postwar baby boomers reached
working age, and it became more acceptable for married
women with children to work. Predict how this
increase in the number of workers is likely to affect the
equilibrium wage and quantity of employment. Draw
supply and demand curves to illustrate your answers.
6. In 2001, Europeans became very concerned about what
is called mad cow disease, and thus about the dangers
posed by eating contaminated meat. What would this
concern do to the demand curve for beef? to the demand
curves for chicken and fish? to the equilibrium price of
beef, chicken, and fish?
Mad cow disease is spread by feeding cows food that
contains parts from infected animals. Presumably the
reason why cows are fed this food is that doing so is
cheaper than relying exclusively on grain. What is the
consequence for the supply curve of beef of restricting
feed to grain? What are the consequences for the price
of beef (a) if the new restrictions fail to restore confidence
in beef and (b) if the new restrictions succeed in
restoring confidence so that the demand curve returns
to its original position?
At about the same time in Europe, there was an outbreak
of hoof-and-mouth disease; to stop the spread of the
disease, large numbers of cattle were killed. What does
this do to the supply curve of beef? to the equilibrium
price of beef?
7. Many advanced industrialized countries subsidize farmers.
Assume that the effect of the subsidy is to shift the
supply curve of agricultural products by farmers in the
advanced industrialized countries to the right. Why might
less-developed countries be unhappy with such policies?
8. Farm output is extremely sensitive to the weather. In
1988, the midwestern region of the United States experienced
one of the worst droughts ever recorded; corn
production fell by 35 percent, wheat production by more
than 10 percent, and oat and barley production by more
than 40 percent. What do you suppose happened to the
prices of these commodities?
These grains are an input into the production of
cattle. The higher cost of grain led many ranchers to
slaughter their cattle earlier. What do you think happened
to the price of beef in the short run? In the
intermediate run?
Why did the drought in the Midwest lead to increased
prices for vegetables and fruits?
9. Suppose that there are 1,000 one-bedroom apartments in
a small town and that this number is fixed. The table gives
the quantity demand in the market for one-bedroom
apartments.
Price
(Rent per month)
Demand
(Apartment units)
$500 1,600
$600 1,400
$700 1,200
$800 1,000
$900 800
$1,000 600
$1,200 400
REVIEW AND PRACTICE ∂ 73