Suppose the demand and supply for sweatshirts are given by:

a. Graph these demand and supply curves. Be sure to correctly label the axes. At what price does equilibrium occur? What quantity is traded at that price?

b. Suppose the price of cotton, a production input for sweatshirts, falls such that at each price, quantity supplied changes by 1200 units. Add the new supply curve to your graph from part a. Label it S'. What is the new equilibrium price? What is the new equilibrium quantity?

c. Draw another graph of the original demand and supply figures. Now suppose that the price of sweatpants, a compliment consumption good to sweatshirts, rises, ceteris paribus. As a result, the quantity of sweatshirts demanded changes by 1200 at each price. Add the new demand curve to your graph. Label it D'. What is the new equilibrium price? What is the new equilibrium quantity?

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Price ($/sweatshirt) 10 28228 20 30 40 50 60 0.⁰ (#/year) 4000 3200 2400 1600 800 0 Qs (#/year) 400 800 1200 1600 2000 2400