Answer all of the following questions in Microsoft Word file with complete questions and answers and attach it.
1. Consider the markets for e-books, e-readers (e.g. kindle), and physical copies of books. For each of the three following pairs, identify whether they are complements or substitutes: a.) e-books and e-readers; b.) e-books and physical copies of books; c.) e-readers and physical copies of books.
2. Using demand and supply curves, show the effect of each of the following on the market for cigarettes:
1. A cure for lung cancer is found.
2. The price of cigars increases.
3. Wages increase substantially in states that grow tobacco.
4. A fertilizer that increases the yield per acre of tobacco is discovered.
5. There is a sharp increase in the price of matches, lighters, and lighter fluid.
6. More states pass laws restricting smoking in restaurants and public places.
3. Assume the market for corn is depicted as in the table that appears below.
7. Complete the table below.
8. What is the equilibrium price?
|
Price per Bushel
|
Quantity Demanded
(millions of bushels)
|
Quantity Supplied
(millions of bushels)
|
Surplus/ Shortage
|
Will Price Rise or Fall?
|
|
$1.80
|
320
|
200
|
|
|
|
2.00
|
300
|
230
|
|
|
|
2.20
|
270
|
270
|
|
|
|
2.40
|
230
|
300
|
|
|
|
2.60
|
200
|
330
|
|
|
|
2.80
|
180
|
350
|
|
|
3. Consumers demand less quantity when prices rise and demand more when prices fall. Give an example from the real world or your personal buying behavior that verifies the law of demand.