1. Explain whether each of the following events represents a shift in the supply curve or a movement along the supply curve. Draw your answer.
a. More homeowners put their houses up for sale during a real estate boom that causes house prices to rise.
b. Many strawberry farmers open temporary roadside stands during harvest season, even though prices are usually low at that time.
c. Many construction workers temporarily move to areas that have suffered hurricane damage lured by higher wages offered.
d. Since new technologies have made it possible to build larger cruise ships (which are cheaper to run per passenger), Caribbean cruise lines have offered more berths, at lower prices, than before.
Part II
1. In the following situations, the market is initially in equilibrium. After each event described below, does a surplus or a shortage exist at the original equilibrium price? What will happen to the equilibrium price as a result? Draw your answer.
a. 1997 was a very good year for California wine grape growers, who produced a bumper-sized crop.
b. After a hurricane, Florida hoteliers often find that many people cancel their upcoming vacations, leaving them with empty hotel rooms.
c. After a heavy snow fall, many people want to buy second hand snow blowers at the local hardware store.