Question

1)

9. Shifts in supply or demand II

The following graph shows the market for cakes in Miami, where there are over 1,000 bakeries at any given moment. Suppose the price of flour, a major ingredient in cakes, suddenly increases.

Show the effect of this change on the market for cakes by shifting one or both of the curves on the following graph, holding all else constant.

2)

10. Market equilibrium

The following table shows the annual demand and supply in the market for shoes in Philadelphia.

Price (Dollars per pair of shoes)	Quantity Demanded (Pairs of shoes)	Quantity Supplied (Pairs of shoes)
20	1,100	200
40	900	400
60	800	500
80	600	900
100	500	1,200

On the following graph, plot the demand for shoes using the blue point (circle symbol). Next, plot the supply of shoes using the orange point (square) symbol). Finally, use the black point (cross symbol) to indicate the equilibrium price and quantity in the market for shoes.

Answer 1