Based on Chapter 3 in "Microeconomics in Context 4th Edition"

Please answer the following questions in complete sentences and show all your work. 1. Define and sketch a supply curve and demand curve. 2. Illustrate and graph: a) a decrease in quantity supplied b) a decrease in supply c) a decrease in quantity demanded d) a decrease in demand 3. Name and explain the five nonprice determinants of demand. 4. Explain in words why the supply curve slopes upward. 5. Explain in words why the demand curve slopes downward. 6. At a price of $8 per cupcake, John is willing to supply 4 cupcakes, Billy 8 cupcakes, and Ricky 10 cupcakes. At a price of $12 per cupcake John is willing to supply 6 cupcakes, Billy 14 cupcakes, and Ricky 18 cupcakes. Graph and carefully label the individual supply curves, and then graph the market supply curve for cupcakes (at these two prices). 7. At a price of $5 per cup of coffee, Kevin is willing to consume 6 cups of coffee, Joseph 8 cups of coffee, and Lisa 3 cups of coffee. At a price of $7 per cup of coffee, Kevin is willing to consume 3 cups of coffee, Joseph 4 cups of coffee, and Lisa 1 cup of coffee. Graph and carefully label the individual demand curves, and then graph the market demand curve for cups of coffee (at these two prices). 8. Using your understanding of the nonprice determinants of supply and demand, analyze each of the following market cases. Draw a graph showing what happens in each situation, indicate what happens to equilibrium price and quantity, and explain why, following the below example. For example: "Market for gasoline: A hurricane hits the gulf of Mexico, destroying many refineries that produce gasoline from crude oil. Price Q2 Q , Quantity The hurricane reduces the number of producers, which shifts the supply curve back (to the left) from S1 to $2; price rises from Pl to P2 and quantity falls from Q1 to Q2. a) Market for expensive meals: A booming economy raises the incomes of many households. b) Market for computers: New technology increases the rate at which computer chips are produced c) Market for bottled water: A rumor circulates that the price of bottled water will quadruple. (Think about the demand side). d) Market for airlines: Due to high levels of pollution only two airlines remain in business