Suppose we have the following information and sequence of events for the coffee market in Ethiopia: • Initially at the first equilibrium P=$20 and Q=20 • A flood hits Ethiopia and destroys coffee farm land • On the new supply curve at P=$20 quantity supplied is QS=10 • The forces of supply and demand equilibrate the market at P=$35 and Q=15 After the shift was there excess demand or excess supply?

Graph the following situation for the coffee market in Ethiopia: • Initially at the first equilibrium P=$20 and Q=30 • Incomes increase • The price of fertilizer (input) for growing coffee increases Question: After the shifts what happened to equilibrium price and quantity in the coffee market?

In order to be an effective price ceiling the price must be set:

If a price ceiling is set above the equilibrium price

Glendale Community College sets a price ceiling a $60 per year for a parking permit, but many complain that they are not able to find a parking place in designated university lots. This suggests that:

If rent control is applied to apartment housing, the prediction of basic supply and demand analysis is that:

A price ceiling at the equilibrium price will:

The minimum wage is an example of a:

The predicted effect of an effective minimum wage from supply and demand analysis is:

In order to be an effective price floor the:

Price Floors below the equilibrium price:

Suppose that the wage in the labor market decreases rapidly. How can interaction effects, brought about by the wage decrease in a supply and demand model, complicate the predictions in a supply and demand model?

Suppose we have the following sequential information concerning the vodka market: • Initial equilibrium price and quantity: P=$10 and Q=1,000 • A $5 excise tax is implemented that suppliers have to remit to the government Question: Suppose that we are on a certain point on the new supply curve at QS=1,000. What price corresponds to this point on the new supply curve?

Suppose the American Medical Association (AMA) is able to restrict the amount of medical licenses in the United States to 100,000 licenses. Suppose that the demand for services from medical doctors increases. Question: What is likely to happen to the equilibrium price and quantity after the increase in demand?

Suppose that we are in a market, which all of a sudden switches from a regular market to a market where there is a third-party payer. Question: All else being equal, what is likely to happen in the market once the third-party is present?