Easy economics question, I will rate every time thank you. Instant coffee is an inferior good. It is a powder to which you just add hot water. Use the supply and demand curve sheets you wereprovided before the exam to think about the short run supply and demand this good.Graph 7 best captures which of the following?An ineffective price ceilingA subsidy to instant coffee productionAn effective price floorA disease which kills much of the coffee cropAn effective price ceilingA drought (no rain) on farms and an increase in the cost of producing tea (tea is a substitute for coffee).An expectation of a recession AND a government subsidy to instant coffee productionA fall in wages in instant coffee factories and an increase in the cost of producing tea (tea is a substitute for coffee). There will be a few supply and demand questions for which we will use these graphs as potential answers. I provide them here so you can print this out and haveit ready.Panel (a)An increase in demandPanel (b)A decrease in demandGraph 5Graph 6$9$9PricePrice8.8776D2P.55DD2D14P, ?P,3322D,D,D,0 5 10 15 20 25 30 35 40 450 5 10 15 20 25 30 35 40 45Q, ? Q,QuantityQQ,QuantityQuantity (millions of pounds per month)Quantity (millions of pounds per month)Graph 7Graph 8PricePricePanel (c)An increase in supplyPanel (d)A decrease in supplyA$9$9S2is88.77P,S266.P,?P,--D1D1P,44D,D,33.2'D,D,1Q, ?Q,QuantityQuantity0 5 10 15 20 25 30 35 40 45O 5 10 15 20 25 30 35 40 45Quantity (millions of pounds per month)Quantity (millions of pounds per month)Price per poundPrice per poundPrice per poundPrice per pound

Graph 7 It shows that the price increases and the supply of coffee is reduced . On the other hand…

7 best captures which of the following? n ineffective price ceiling subsidy to instant coffee production n effective price floor disease which kills much of the coffee crop n effective price ceiling drought (no rain) on farms and an increase in the cost of producing tea (tea is a substitute for coffee). n expectation of a recession AND a government subsidy to instant coffee production fall in wages in instant coffee factories and an increase in the cost of producing tea (tea is a substitute for coffee).

7 best captures which of the following? n ineffective price ceiling subsidy to instant coffee production n effective price floor disease which kills much of the coffee crop n effective price ceiling drought (no rain) on farms and an increase in the cost of producing tea (tea is a substitute for coffee). n expectation of a recession AND a government subsidy to instant coffee production fall in wages in instant coffee factories and an increase in the cost of producing tea (tea is a substitute for coffee).

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 10PA

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