Comment on the following statement: “In the short run, Mr. Mohammed, a seller in the Fruit & Vegetable Market in Al-Aweer, faces a demand curve that is simply a horizontalline at the market equilibrium price. In other words, competitive sellers, in this market, face perfectly elastic demand in the short run.”

If Charmin discovered a new, cheaper, production method for toilet paper would this, ceteris paribus, be reflected as a change in demand or a change in supply in the market for Charmin toilet paper - a normal good?  Explain. Be sure to clearly identify a textbook variable or determinant that is causing this change.  Would this change be an increase or decrease?  Explain.  Would this change result in a surplus or in a shortage in the market for Charmin toilet paper?  Explain.  Given this surplus or shortage, how will a new equilibrium be established?  What do you predict will happen to the equilibrium price and the equilibrium quantity exchanged in the market for Charmin toilet paper?  Explain.

Wendy works at a hamburger restaurant that's typical for its overall market. She notices that lately both the equilibrium price and the equilibrium quantity of hamburgers has fallen. Wendy thinks this could have occurred because of one of two events that happened recently: First event: People don't like hamburgers as much as they used to. Second event: The price of the type of meat used to make these hamburgers has fallen. The overall effect on the market here (or at least the dominant change) comes from O the first event (demand shifting right) the second event (supply shifting left) the first event (demand shifting left) O the second event (supply shifting right)

In the shopping center nearby, you saw an organic grocery store that barely sells any goods in a day. You are pretty sure the business is not making any profits.   1) Why do the stores stay open? Explain briefly 2) If what happens in this organic grocery store is a common observation in the market, in the long run, what will happen to the supply of organic grocery and the price? Use a supply and demand diagram to show how that response will change the combined amount of consumer surplus and producer surplus in the market.