ASSIGNMENT # 2

Question 1.
Ali , Sana and Ahmad are the only buyers of dragon fruits in England. Their individual
demand schedule is given below:
Price Quantity Quantity Quantity
demanded by Ali demanded by demanded by
SANA Ahmad
0 TL 8 4 6
1 TL 6 3 4
2 TL 4 2 2
3 TL 2 1 0
4 TL 0 0 0

Best Foods and Top Foods are the only sellers of dragon fruits in England. Their individual
supply schedule is given below:
Price Quantity supplied Quantity supplied
by Best Foods by Top Foods
0 TL 0 0
1 TL 2 0
2 TL 4 4
3 TL 6 8
4 TL 8 10

a. Produce the market demand schedule and the market supply schedule for the dragon fruits
market in England.

b. Draw the market demand curve and the market supply curve on a scaled graph.

c. Show the equilibrium point on the graph, and write down the equilibrium price and the
equilibrium quantity in the market.

Question 2.
For each of the following scenarios, use a supply and demand diagram to illustrate the effect of
the given shock in the specified market. Explain whether there is a shift in the demand curve, the
supply curve, or both. Explain the effect on the equilibrium price and quantity.

a. Cyprus is going through an unexpectedly cold winter. Show the effect on the market of
heaters in Cyprus.

b. Turkey and China are major producers of textiles. Workers in Turkey decide to go on strike.
Show the effect on the market for Turkish textiles.

c. Show the effect of the situation described in (b) on the market for Chinese textiles.

d. Very recently, a mega-sized hotel opened up in Cyprus, increasing the total bed capacity in
the country by 10%. In the meanwhile, holiday bookings for Cyprus are at a record low for the
new year (due to very affordable holiday prices offered by Egypt). Show the effect on the
market for hotel accommodation in Cyprus, and comment on how the final equilibrium price
and quantity will compare with the initial equilibrium price and quantity.