Question

You must a) identify the economic shock taking place, determining if they are supply and/or demand shocks, b) draw the relevant graphs, and c) summarize the impact on equilibrium price and quantity. Make sure that all parts of the graphs are labeled.

9. Illustrate how the tariff, detailed in (8) impacts the market for Germany luxury vehicles in the United States.

10. The United States is currently in a recession and real incomes are falling. How will this impact the market for luxury vehicles?

11. Several years ago, in the month of February, severe weather conditions negatively affected rose production in flower growing areas of this country. February is also a month where flower sales are traditionally high, due to the existence of Valentines Day. Illustrate how these events, together, affected the market for roses during that month. Suppose we see that the quantity exchanged of roses actually increased around Valentine’s Day. Based on your work above, what would explain that? Tie your answers to the graphical work above.

Answer 1