Question

Section 3 The town of Bree is the center for pipeweed trade in the northwest of Middle Earth. Trading is conducted at the Inn of the Prancing Pony, specializing in the high quality Longbottom Leaf from the South Farthing. For Bree stood at an old meeting of ways, another ancient road crossed the East Road just outside the like at the western end of the village, and in former days Men and other folk of various sorts had travelled much on it. The Prancing Pony was a meeting place for the idle, talkative, and inquisitive among the inhabitants, large and small, of the four villages, and a resort of Rangers and other wanderers, and for such travellers (mostly dwarves) as still journeyed on the East Road, to and from the Mountains. a) Draw demand and supply for the Bree pipeweed market. Show the equilibrium price and quantity. b) A large party comes up from Isengard in the south to participate in the pipeweed market. Draw what happens in the Bree market. Show three separate pipeweed market scenarios—one with a higher equilibrium price, one with a lower equilibrium price and one with the same equilibrium price. What is the determinant in each case? Do 3 graphs. Don't make up determinants. Is posted on Blackboard. c) Nine nasty black horsemen trample most of the pipeweed crop in the South Farthing of the Shire, the main growing center for tobacco leaf. Draw what happens in the Bree pipeweed market. What happens to the equilibrium price and quantity? d) The Thain of the Shire placed a price ceiling on pipeweed below the equilibrium price. Draw the pipeweed market showing market price, equilibrium price, quantity demanded and quantity supplied. What condition in the market results from the price ceiling and how would you calculate it? How much is actually exchanged in the market?

Answer 1

f - Equilibrium Demand of party comes to supply be the o participate. do increases when large PT D D changes more than S. (P& g S changes =D changes Price is constant. a reses both rise K o o Sclanges more than Do Price halls but souses After destroying crop Pasises f & falls supp Market price = pk SD = A. NA - Ceiling Sy Og = 2 Shortage in market Actually exchanged on at pt = 91-02