Nguyễn Tuấn Anh -1607807

Problem 1
A. global warming makes for longer and hotter Australian summers

The demand for softdrinks are usually more during summer seasons. So when the gloabal
warming makes the summer season prolonged, it will lead to increased demand of soft drinks
by the consumer. This will make the demand curve to shift rightwards, the supply of soft
drinks remaining constant. This will lead to increase in equilibrium price and quantity of soft
drinks in the market.

B. new health concerns about the preservative content in soft drinks

Health concerns about consumption of soft drinks will create negative publicity for the soft
drinks, which will unfavourably change the demand of soft drinks. This will make the
demand curve to shift to the left, which will make the equilibrium price and quantity to
decrease in the market.

C. an increase in the price of sugar used to produce soft drinks

Sugar is used in production of soft drinks. So increase in price of sugar will make the
production of soft drinks more costly. This will make the producers of the soft drink to supply
lesser quantities at different price levels. The decrease in supply will be marked by a leftward
shift in the supply curve, which will lead to increase in equilibrium price and decrease in
equilibrium quantity of soft drinks.

D. a decrease in the price of petrol

Decrease in price of petrol, decreases the cost of production,as the price of transportation and
price of other factors of production will also reduce. This will enable the producer to supply
more quantities of goods at different price levels, making the supply curve to shift to the
right. The rightward shift in supply curve will make the equilibrium price to decrease and
equilibrium quantity to increase.

Note: In the above diagrams:

X axis : Quantity of soft drinks

Y axis: Price level of soft drinks

P0 and Q0 : Original price and quantity

P1 and Q1 : New price and quantity

Problem 2
The changes in prices of abalone and raw oysters can be analyzed in terms of movements in
supply and demand, as well as the factors that have caused these patterns of changes.

Abalone Prices:

Price Movement: Steady from 1940 to 1960, then increased from about $10 per pound to $70
per pound by 2000.
Supply and Demand Analysis:
Increase in Price: The significant increase in price suggests an upward shift in demand and/or
a decrease in supply.
Possible Factors:
Demand Increase: Factors such as changes in consumer preferences, increased awareness of
abalone as a delicacy, or growth in population with higher disposable income could have led
to an increase in demand.
Supply Decrease: Factors such as overfishing, habitat destruction, or regulatory constraints
might have led to a decrease in the supply of abalone.
Raw Oysters Prices:

Price Movement: Steady from 1860 to 1960, then increased from about 50 cents per oyster to
$2.50 per oyster by 1980, and since 1980 has been steady.
Supply and Demand Analysis:
Increase in Price: The initial increase in price suggests an upward shift in demand and/or a
decrease in supply, while the subsequent steadiness indicates a balance between supply and
demand.
Possible Factors:
Demand Increase: Similar to abalone, changes in consumer preferences, increased awareness
of the nutritional benefits of oysters, or marketing efforts promoting oysters as a gourmet
food could have led to an increase in demand.
Supply Decrease: Environmental factors such as pollution, habitat loss, or disease outbreaks
affecting oyster populations could have decreased the supply.
In summary, the changes in prices of both abalone and raw oysters are consistent with
movements in supply and demand. Increases in price suggest either an increase in demand, a
decrease in supply, or a combination of both. Factors such as changes in consumer
preferences, environmental pressures, regulatory constraints, and market dynamics likely
contributed to these patterns of changes in demand and supply over the years.

Problem 3
a. Explanation for the Increase in Price of Garlic:

Decrease in Supply: The article mentions that due to low prices for garlic in the previous
year, the amount of land set aside for growing garlic in Jingxiang in the current season had
been halved. This reduction in the acreage dedicated to garlic cultivation implies a decrease
in the overall supply of garlic.
Increase in Demand: The rumors that garlic was an effective antidote to the swine flu likely
caused an increase in demand for garlic. People may have been stocking up on garlic due to
perceived health benefits, leading to a surge in demand.
b. Likely Outcome for the Quantity of Garlic Produced:
With the price of garlic increasing significantly due to the combination of decreased supply
and increased demand, garlic producers in Jingxiang are likely to respond to the higher prices
by increasing production.
However, it's important to note that agricultural production cannot be immediately adjusted in
the short term. While garlic producers may respond to the higher prices by planting more
garlic in subsequent seasons, it takes time for the crop to grow and be harvested. Therefore, in
the short term, the quantity of garlic produced may not immediately increase significantly.
In the longer term, if the increased prices persist and garlic continues to be perceived as
valuable due to health concerns or other factors, producers may expand their garlic
cultivation further, eventually leading to an increase in the quantity of garlic produced.
Now, let's illustrate these points using a supply-demand diagram:

In the diagram:

The initial equilibrium (E) represents the garlic market before the price increase.
The decrease in supply shifts the supply curve to the left (from S to S'), leading to a new
equilibrium point (E').
The increase in demand shifts the demand curve to the right (from D to D'), intersecting with
the new supply curve at the new equilibrium point (E').
This results in a higher price (P') and quantity (Q') of garlic exchanged in the market.
Overall, the increase in price of garlic is primarily driven by a decrease in supply and an
increase in demand, while the quantity of garlic produced is likely to increase in the long run
as producers respond to the higher prices.