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Can you explain each question?I just don't understand how. All answers are bolded 11. Consider the...

Can you explain each question?I just don't understand how. All answers are bolded

11. Consider the case that the market for coffee in the US is perfectly competitive. Suppose that coffee is a normal good. Use the short-run model of demand and supply to figure out how equilibrium price and quantity of coffee changes if all Federal income tax rates are lowered.

a. Pꜛand Qꜜ b. Pꜜand Qꜜ c. Pꜛand Qꜛ d. Pꜜand Qꜛ e. Not enough information to determine.

12. Consider the case that the market for coffee in the US is perfectly competitive. Suppose that tea is a substitute for coffee. Use the short-run model of demand and supply to figure out how equilibrium price and quantity of coffee changes if the price of tea decreases.

a. Pꜛand Qꜜ b. Pꜜand Qꜜ c. Pꜛand Qꜛ d. Pꜜand Qꜛ e. Not enough information to determine.

13. Consider the case that the market for coffee in the US is perfectly competitive. Use the short-run model of demand and supply to figure out how equilibrium price and quantity of coffee changes if the wages for labor in coffee production decreased.

a. Pꜛand Qꜜ b. Pꜜand Qꜜ c. Pꜛand Qꜛ d. Pꜜand Qꜛ e. Not enough information to determine.

14. Consider the case that the market for coffee in the US is perfectly competitive. Use the short-run model of demand and supply to figure out how equilibrium price and quantity of coffee changes if it became illegal to grow coffee in Columbia.

a. Pꜛand Qꜜ b. Pꜜand Qꜜ c. Pꜛand Qꜛ d. Pꜜand Qꜛ e. Not enough information to determine 4

15. Consider the case that the market for aluminum in the US is perfectly competitive. Use the shortrun model of demand and supply to figure out how equilibrium price and quantity of aluminum change if the price of steel increased and aluminum production technology increased.

a. Pꜛ b. Qꜜ c. Qꜛ d. Pꜜ e. Not enough information to determine

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Answer #1

Answers to Question No. 11 to 14

11. In case of a federal income tax cut, the consumers' disposable income will increase. An increase in income will lead shift in the demand curve to the right. The equilibrium will move up to the right. The equilibrium quantity will increase and also the equilibrium price will increase.

12. If the price of tea decreases which is considered a substitute to coffee, the demand for coffee will decrease. The demand curve for coffee will shift to the left as coffee has now become relatively more expensive than tea. The equilibrium price and quantity both will decrease.

13. If the wages of labor decreases in the coffee production (The input to production of coffee), the cost of production of coffee will decrease. This will lead to higher profitability for coffee producers. The sellers will now be more interested to sell more at current price. They will increase supply at current price. The supply curve will shift to the right. The equilibrium price will decrease and quantity will increase.

14. If it became illegal to grow coffee in Columbia the supply of coffee will decrease in the US market. The supply curve will shift to the left. The equilibrium price will increase and equilibrium quantity will decrease.

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