Economics Help

The following events occur simultaneously:

(i) The price of beef rises (beef

and

leather both come from cows).

(ii) The price of alligator hides increases.

b. Draw a demand-and-supply graph showing equilibrium in the market for leather before the two events

described above. Label the axes and
curves. Label the initial equilibrium – before events (i) and (ii) – as

P0 and

Q0 on your graph.

c. Now show on your graph how event (i) affects the demand or supply curves for leather. Briefly explain

which of the demand or supply variables caused the effect you are showing on your graph.

d. Now show on your graph how event (ii) affects the demand or supply curves for leather. Briefly explain

which of the demand or supply variables caused the effect you are showing on your graph.

e. Based on your graphic analysis, what do you predict will happen to the equilibrium price of leather? The

equilibrium quantity of leather?

 

You are a financial analyst with a specialization in the motion picture industry. You have been hired to

 

analyze the prices of movie theater tickets. The following two events are occurring (simultaneously) in the

 

United States:

 

(i) A new national chain opens new multi-screen movie theaters in most U.S. cities.

 

(ii) Movie theaters cut the price of popcorn and soft drinks in half.

 

a. Draw a demand-and-supply graph showing equilibrium in the market for movie tickets before the above

 

two events take place. Label the axes and curves. Label the initial equilibrium— before events (i) and (ii) —

 as

P0 and Q0 on your graph.

 

b. Now show on your graph how event (i) affects the demand or supply curves for movie tickets. Briefly

 

explain which of the demand or supply variables caused the effect you are showing on your graph.

 

c. Now show on your graph how event (ii) affects the demand or supply curves for movie tickets. Briefly

 explain which of the demand or supply variables caused the effect you are showing on your graph. 

d. Based on your graphic analysis, what do you predict will happen to the equilibrium price of movie

 

tickets? The equilibrium quantity of movie tickets?

 

96.