21. Consider the market for jigsaw puzzles, which provide a delightful way to spend time indoors if you can't leave your home for some reason. a. How will a COVID-19 induced lockdown impact demand, equilibrium price and equilibrium quantity in the jigsaw puzzle market? For full points, explain any demand curve movers and/or shifters affected by the event, display these changes graphically, and analyze the new market equilibrium. b. Assume the event described above has taken place. Puzzle manufacturers expect that this new market demand will remain at its new level for the foreseeable future. Manufacturing companies that did not previously make puzzles noticed this change in demand, and re-allocated their resoureces to begin puzzle production. How will this event impact supply, equilibrium price, and equilibrium quantity in the jigsaw puzzle market? For full points, explain any supply curve movers and/or shifters affected by the event, display these changes graphically, and analyze the new market equilibrium. c. If these events cause larger changes in demand than in supply, what happens to equilibrium price? What if the events cause larger changes in supply than in demand? Use graphs to explain your answers.

21. Consider the market for jigsaw puzzles, which provide a delightful way to spend time indoors if you can't leave your home for some reason. a. How will a COVID-19 induced lockdown impact demand, equilibrium price and equilibrium quantity in the jigsaw puzzle market? For full points, explain any demand curve movers and/or shifters affected by the event, display these changes graphically, and analyze the new market equilibrium. b. Assume the event described above has taken place. Puzzle manufacturers expect that this new market demand will remain at its new level for the foreseeable future. Manufacturing companies that did not previously make puzzles noticed this change in demand, and re-allocated their resoureces to begin puzzle production. How will this event impact supply, equilibrium price, and equilibrium quantity in the jigsaw puzzle market? For full points, explain any supply curve movers and/or shifters affected by the event, display these changes graphically, and analyze the new market equilibrium. c. If these events cause larger changes in demand than in supply, what happens to equilibrium price? What if the events cause larger changes in supply than in demand? Use graphs to explain your answers.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter9: Monopoly

Section: Chapter Questions

Problem 31P: Return to Figure 9.2. Suppose P0 is 10 and P1 is 11. Suppose a new firm with the same LRAC curve as...

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Return to Figure 9.2. Suppose P0 is 10 and P1 is 11. Suppose a new firm with the same LRAC curve as the incumbent tries to bleak into the market by selling 4,000 units of output. Estimate from the graph what the new firms average cost of producing output would be. If the incumbent continues. to produce 6,000 units, how much output would the two films supply to the market? Estimate what would happen to the market price as a result of the supply of both the incumbent firm and the new entrant. Approximately how much profit would each firm earn? Figure 9.2 Economics of Scale and Natural Monoploy
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urgent Question 3.Assume that a Swiss drug company holds the patent on a malaria medicine that has no closesubstitutes. If it charges the same price in every country where it sells this medicine, a price thatwill maximize its profits, that price will exceed what the vast majority of consumers in twentylower-income countries can afford to pay.a) Illustrate this situation using supply and demand curves.b) Use supply and demand curves to show how the Swiss company can sell at different prices ineach country and make a profit in each. Identify on the curves the profit the Swiss companymakes in a typical poorer country, and the profit it makes in a wealthier country.c) What condition is necessary for the Swiss company to be able to follow this strategy?
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12. Given that the U.S. government mandates the use of ethanol as a partial substitute for gasoline (10% by volume), and that ethanol manufactured in the U.S. is made from corn; how will the supply of ethanol, the demand for ethanol, as well as its equilibrium price and quantity, be affected by the following event: Publication of a scientific study which concludes that the production of ethanol from corn in the United States and its use as fuel produces more carbon dioxide emissions than the use of gasoline. There may be miltiple answers f) Equilibrium Quantity will increase. d) Supply will increase. g) Equilibrium Quantity will decrease. a) To the extent the amount of ethanol additive in gasoline is determined by government fiat, neither demand for not supply of ethanol will be affected unless the government changes its requirements. e) Supply will decrease. j) Equilibrium Price and Quantity will remain unchanged.…
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