Exhibit 1 Price 10. Use Exhibit 1. For this given graph of a market, which of the following statements is (are) correct? (x) An increase in supply would cause a surplus and, as a result, the price would fall below $18 and the new equilibrium quantity would be in excess of 600 units (y) If the actual price was $12, there would be a shortage of 450 units and the price would rise to equilibrium at $18. (z) A decrease in demand would cause a surplus at the price of $18 and the quantity sold would decrease to an equilibrium amount that is less than 600 units. A. (x), (y) and (z) B. (x) and (y) only $24 $18 $12 C. (x) and (z) only D. (y) and (z) only E. (z) only 150 300 450 600 750 900 Quantity

Review Figure 3.4. Suppose the price of gasoline is 1.60 per gallon. Is the quantity demanded higher or lower than at the equilibrium price of 1.40 per gallon? What about the quantity supplied? Is there a shortage or a surplus in the market? If so, how much? Figure 3.4 Demand and Supply of Gasoline

What is consumer surplus? How is it illustrated on a demand and supply diagram?

Suppose both of these events took place at the same time. Combine your analyses of the impacts of the iPod and the tariff Induction to determine the likely impact on the equilibrium price and quantity of Sony Walkman-type products. Shaw your answer graphically.

Can you propose a policy that meld induce the market to supply more rental housing units?