# @ 7 100%AT&T9:08 AMHW 1.pdfIII. Supply and Demand Changes (be sure to label the axis on all of your graphs)a) Suppose that you do a national survey of Americans, asking them how they feel aboutAmerican-made cars versus Japanese-madeAmericans' "taste" for American-made cars has decreased and the taste for Japanese-made cars has increased. Using the demand and supply model, show how this change intaste for American-made cars will impact the market for American-made cars. Give yourpredictions for the change in the equilibrium price and the equilibrium quantity ofAmerican-made cars bought and soldb) Suppose that you have information indicating that the price of steel (an important inputof production in the auto industry) has doubled during the past few months. Show howthis economic shock will influence the market for American made cars and give yourSupposeas well that you discover thatcars2predictions for equilibrium price and sales changec) Suppose both (a and b above) of these shocks arewould be your prediction for equilibrium price and sales change in the American carmarket?occurring simultaneously. Now whatd) Suppose Congress approves a proposed "temporary worker" program and American firmsfind out that theyworkers become 'less scarce'. How would this economic shock impact the market forlettuce?are able to hire workers while paying lower wages. This happens becausee) Scientific reports have shown that iceberg lettuce (much of it grown in California) showhigh levels of contamination from rocket fuel. California farmers use the Colorado Riverfor irrigation of their fields and the water of the Colorado River is contaminated fromproduction on sites used by several defense contractors. How would this economic shockimpact the market for lettuce?) Suppose both shocks (d and e above)predictions for equilibrium price and sales change?g) There are four possible ways that demand and supplyThese ways are listed below. For each case, draw two demand and supply graphs andshow the demand changeOn each graph, indicate the direction of the change in P* and Q*. Finally, in each case,give your prediction for the overall net impactdemand and the supply change simultaneouslySimultaneous Increase in Demand and Increase in SupplySimultaneous Decrease in Demand and Decrease in SupplySimultaneous Increase in Demand and Decrease in SupplySimultaneous Decrease in Demand and Increase in Supplyoccur simultaneously. Now what would be yourcan simultaneously shift in a marketon the first graph and the supply change on the second graphon P* and Q* for the market when both theIV. Price ControlPrice Per BushelQuantity DemandedQuantity Supplied(dollars)336,00030,0002,000625,0005,000620,00010,0001216,0001516,00013,00023,000182130,0008,000

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Question 3 A-G I kind of understand what they are asking but I don’t know what specifically they want me to show. Are they all supposed to be graphs?

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Hey, Thank you for the question. According to our policy we can only answer 3 subparts per question. If you need further help, post the question again and mention the subpart you want us to solve.

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a)

The change in taste leads to a fall in demand for American cars. If the initial demand is D1 and supply is S1, the equilibrium is at e with price P1 and quantity Q2. The fall in demand leads to a leftward shift in the demand curve to D2 and the new equilibrium point is e2, price is reduced to P2 and Quantity bought and sold reduces to Q2.

Step 3

b)

The increase in the price of steel makes the inputs for producing the American cars expensive. Hence the supply of the car will reduce, thus shifting...

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