Use a supply and demand diagram for a specified competitive market to demonstrate the effect of the specific shocks given in the cases below on the equilibrium price and quantity. Clearly explain the key adjustments in demand and supply curves that result. Show whether there is a shift in the demand curve, the supply curve, or neither. a. An abrupt heat wave smashes the city of Lusaka. Show the effect in the ice cream market in Lusaka. b. Authorities impose a tax on ice cream to be paid by producers. How does this affect the ice cream market? c. We are told that Kenya and Madagascar are major producers of cotton. Madagascar workers decide to go on strike. Show the effect on the market for Madagascar cotton.

Use a supply and demand diagram for a specified competitive market to demonstrate the effect of the specific shocks given in the cases below on the equilibrium price and quantity. Clearly explain the key adjustments in demand and supply curves that result. Show whether there is a shift in the demand curve, the supply curve, or neither. a. An abrupt heat wave smashes the city of Lusaka. Show the effect in the ice cream market in Lusaka. b. Authorities impose a tax on ice cream to be paid by producers. How does this affect the ice cream market? c. We are told that Kenya and Madagascar are major producers of cotton. Madagascar workers decide to go on strike. Show the effect on the market for Madagascar cotton.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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