2 QN1 :

a) Equilibrium price in this market = 5

Equilibrium quantity in this market = 175

b) With a ceiling price of 3 dollars placed on the market :

S = 100

D= 220

D > S => lacking of 120 products

c) With a price ceiling of $7 is set on the market:

S = 220

D = 100

S > D => surplus of 120 products

d)

The price in the market is 7 dollars , the market is over-demanding and under-supplying, so to

adjust the balance in the market, it is necessary to Supply shift left and demand low up.

3. QN 1:

Graph the effect on equilibrium price and quantity in the market for oranges for each

of the following changes (graph each one separately). (2 points)

a. A chemical routinely sprayed on orange orchards is found to cause cancer.(0.5)

- Demand low and supply raise.

b. The wages of farm workers increase.

-Supply raise and demand low.

c. A new orange picking machine is invented. For the same cost, it can pick more

oranges, faster, and with less damage than other machines.

-Supply raise and demand low.

e. Consumer income falls.

-Supply raise and demand low.

f. The price of tangerines falls.

-Supply raise and demand low.