Let us assume that the market for strawberries has the following
demand and supply schedules: a) Plot the demand and supply curves in a graph. Make sure that
you label the curves and write what you have put in each axis. b) What are the equilibrium price and quantity for strawberries?
Identify the equilibrium point, equilibrium price and equilibrium
quantity as E, Pe, Qe, respectively. c) What happens to the market at prices $3.99 and $7.99 per
pound? Is the market in equilibrium/excess demand/excess supply?
Identify graphically and calculate the amounts of shortage/surplus
in the market at these prices. d) It’s rumored that a particular fertilizer that is believed to
be positively associated with cancer has been used to grow
strawberries. Use the supply and demand diagram for strawberries to
illustrate the effect on demand, supply, equilibrium price and
equilibrium quantity for strawberries. Illustrate the adjustment
process to the new equilibrium. e) A long strike by the farm workers has been blamed for this
year’s bad harvest. Use the supply and demand diagram for
strawberries to illustrate the effect on demand, supply,
equilibrium price and equilibrium quantity for strawberries.
Illustrate the adjustment process to the new equilibrium.