The following events occur simultaneously:
(i) The price of beef rises (beef
and
leather both come from cows).
(ii) The price of alligator hides increases.
b. Draw a demand-and-supply graph showing equilibrium in the market for leather before the two events
described above. Label the axes and
curves. Label the initial equilibrium – before events (i) and (ii) – as
P0 and
Q0 on your graph.
c. Now show on your graph how event (i) affects the demand or supply curves for leather. Briefly explain
which of the demand or supply variables caused the effect you are showing on your graph.
d. Now show on your graph how event (ii) affects the demand or supply curves for leather. Briefly explain
which of the demand or supply variables caused the effect you are showing on your graph.
e. Based on your graphic analysis, what do you predict will happen to the equilibrium price of leather? The
equilibrium quantity of leather?
You are a financial analyst with a specialization in the motion picture industry. You have been hired to
analyze the prices of movie theater tickets. The following two events are occurring (simultaneously) in the
United States:
(i) A new national chain opens new multi-screen movie theaters in most U.S. cities.
(ii) Movie theaters cut the price of popcorn and soft drinks in half.
a. Draw a demand-and-supply graph showing equilibrium in the market for movie tickets before the above
two events take place. Label the axes and curves. Label the initial equilibrium— before events (i) and (ii) —
as
P0 and Q0 on your graph.
b. Now show on your graph how event (i) affects the demand or supply curves for movie tickets. Briefly
explain which of the demand or supply variables caused the effect you are showing on your graph.
c. Now show on your graph how event (ii) affects the demand or supply curves for movie tickets. Briefly
explain which of the demand or supply variables caused the effect you are showing on your graph.
d. Based on your graphic analysis, what do you predict will happen to the equilibrium price of movie
tickets? The equilibrium quantity of movie tickets?
96.
