2 assignments due in a week. Written by hand and take pictures go through the instructions before you start EVERYTHING MUST BE FROM TEXTBOOK AND USE CRITICAL AND LOGICAL THINKING

Assignment 3 – Due ___________

Do chapter 4 summaries, done by hand with diagrams included.

Answer these questions briefly. Use diagrams where appropriate.

Explain with a diagram the difference between demand and quantity demanded.
Explain with a diagram the difference between an “increase in demand” and an “increase in quantity demanded.”
How do you know if a good is a normal good or an inferior good?
How do you know if two goods are complements or substitutes?
Give an example of an expectation that would cause you to increase demand in a normal good.
Give an example of an expectation that would cause you to decrease demand in a normal good.
What is the relationship between quantity supplied and price? What explains this relationship?
Explain with a diagram the difference between a shift in the demand curve and a movement along the demand curve.
If supply increases would this be known as a shift in supply or a movement along the supply curve? Explain.

Lab Exercise #3 Supply and Demand Problems

1. a. Graph the points and construct a demand/supply curve from the following data:

	Market for Hamburger
Price	Demand	Supply
20		8000
16	2000	7000
12	4000	6000
	6000	5000
	8000	4000

b. Determine the (approximate) equilibrium price and quantity that will result.

** c. Explain why this point you have is the equilibrium price and quantity, and why $12 would not be an equilibrium price.

2. This question relates to the effect of each of six events on the market for beef. Each event is to be considered as separate and distinct from the other events. ** Only one of the demand or supply curves should shift. Factors of production (resources) cannot be shifted from beef to pork production or vice versa.

The headings of the four columns are to be interpreted as follows:

D = change in the demand schedule for beef

S = change in the supply schedule for beef

P = change in the equilibrium price of beef

Q = change in the quantity of beef exchanged at the new equilibrium price

a. Draw a diagram and EXPLAIN YOUR ANSWER for each of the situations below for the appropriate markets to help with your answers. Be sure to label the graphs appropriately, showing changes in the supply or demand curves (only ONE curve will shift.) Remember that you must tell me which non-price determinant category you are using in your explanation.

b.. In the blanks under the first two columns (D & S), insert a '+' for a shift to the right, '-' for a shift to the left, and 0 for no shift, in demand or supply. In the blanks under the last two columns (Pe & Qe), insert + for a rise and - for a fall in the equilibrium price or equilibrium quantity, and a “?” when the outcome cannot be determined (note: a 0 will not occur in the last two columns).

	D S Pe Qe
a) Because of a plague which attacks the hog population, the sale of pork is banned. Cattle are not affected by this disease.	____ ____ ____ ____
b) The development of a new feed reduces the cost of feeding cattle.	____ ____ ____ ____
c) A $0.15 per pound subsidy is granted to the producers of pork.	____ ____ ____ ____
d) There is a rise in wage rates paid by ranchers to their workers.	____ ____ ____ ____
e) Medical findings establish that beef is the source of a vitamin that extends peoples life spans.	____ ____ ____ ____
f) A severe winter kills a large number of steers.	____ ____ ____ ____

** (more difficult) Hint: What does it mean to "shift factors of production” in farming? In particular, how would your answers to a) and c) parts be altered if we allow that resources could be shifted easily from beef to pork?