HOMEWORK $2$

ECON. $2020$

DUE: At the beginning of class on Thursday, February $8$th

Demand

or

Supply

Shift Factor

Note: The following shifts are occurring in the market for U$.$S$.$ defense goods.

$.$ A new superior engineering design is developed that reduces the amount of materials needed to produce nuclear submarines.

$.$ South Korea currently buys defense goods from the U$.$S$.,$ and the exchange rate changes from $1,150$ won$/1$ U$.$S$.$$ to $975/1$ U$.$S$.$$$.$

$.$ A large firm in the defense industry closes down when it loses a defense contract.

$.$ A country that previously bought U$.$S$.$ defense goods enters into a peace agreement with its warring neighbors.

Note: The following shifts are occurring in the market for Ramen noodles, an inferior good.

$.$ The price of mac$-$n$-$cheese, a substitute for Ramen noodles, rises.

$.$ A pollution tax is imposed on firms manufacturing Ramen noodles.

$.$ Congress approves a tax cut, resulting in higher incomes for consumers.

$.$ New health studies emerge stating that eating Ramen noodles increases your risk of a heart attack.

shifts

shifts

shifts

shifts

shifts

shifts

shifts

shifts

Left

Shifts or

Right

Equilibrium

Price is

Higher or

Lower

Equilibrium

Quantity is

Higher or

Lower