A. Using a demand and supply model, graph and discuss the effects on the price and quantity of laser eye surgeries performed if each of the following events occurs. Treat each event separately in your analysis. Make sure to label all your axes and curves clearly.

1. (4) Surgical techniques improve to reduce the side effects of laser eye surgeries
2. (4) More physicians complete training in laser eye surgery
3. (4) The government imposes a price ceiling on laser eye surgeries below the equilibrium price.

B. Anna and Barry each have 7 days a week to divide up between two possible activities - canning potatoes and canning cabbage. Below are their weekly production possibilities showing the maximum amount of each canned food they can produce if they spend all their time on a specific food: For example, if Anna spends all 7 days on potatoes, she can make 100 cans of potatoes and no cans of cabbage. If she spends all 7 days on cabbage, she can make 200 cans of cabbage and no cans of potatoes. She can also divide up her 7 days between the two foods.

	Cans of potatoes	Cans of cabbage
Anna	100 cans	200 cans
Barry	120 cans	150 cans

1. (1) Who has an absolute advantage in canning potatoes? Why?
2. (1) Who has an absolute advantage in canning cabbage? Why?
3. (2) Who has a comparative advantage in canning potatoes? Why?
4. (2) Who has a comparative advantage in canning potatoes? Why?
5. (1) Suppose Anna spends 3.5 days canning potatoes and 3.5 days canning cabbage.How many cans of each food will she produce?
6. (1) Suppose Barry spends 3.5 days canning potatoes and 3.5 days canning cabbage. How many cans of each food will he produce?
7. (4) Is there a trade based on the principles of comparative advantage that would increase both Anna's and Barry's amount of canned goods? They could choose to allocate their time differently.Explain.

C. The supply curve for tennis balls has shifted due to input cost increases.The equilibrium quantity changed, but the price did not. Nothing else affecting this market changed. Can you say anything about the price elasticity of demand for tennis balls given this information? Include a well-labeled diagram to illustrate your analysis.