Part I:Demand

1) Which demand curve will be steeper, the demand curve for Valencia oranges, the demand
curve for all oranges, or the demand curve for all citrus fruit? After answering, generalize this
principle.

2) State whether each of these will move the demand curve for a bands next show to the left,
right, or not at all:
a) Shortly before the show, the bands new album is released to great praise.
b) A better-known band which plays the same style of music is playing at the same time at a
nearby club.
c) Housing, medical, and educational costs have risen steeply this year.
d) The band decides to charge $5 more per ticket.

Part II: Supply

1) Recorded music has a horizontal supply curve. Come up with several other distinct products
which also would have a horizontal supply curve. What do these products all have in common?

2) State whether each of these will move the supply curve for brass cymbals to the left, right, or
not at all.
a) Rampant speculation in the commodities market causes the price of copper (the primary
component of brass) to triple.

b) Superior molding equipment is produced which is cheaper than regular equipment and can
mold metal with extremely high precision.

c) Drum synthesizers (rather than human drummers who have cymbals in their kits) become the
in thing across all genres of popular music.
Part III: Market Equilibrium

1) In New England, a larger amount of fresh berries are purchased in the summer than during
other seasons, and a larger amount of heavy coats is purchased during the winter than during
other seasons. During the summer, fresh berries are cheaper than at other times. During the
winter, heavy coats are more expensive than at other times. Explain this apparent paradox, using
supply and demand curves.

2) Over the past decade, San Francisco has become a much more desirable place to live, and the
general prosperity of the area has increased. However, local rules (in place for decades) make it
all-but-impossible to build new housing. Use properly-tilted supply and demand curves to show
the effect on housing prices.

3) Show the effect on price and quantity on wood instrument cases (by moving either the supply
curve or the demand curve (but not both) in each case) Assume that both the supply and demand
curves for handmade wood instrument cases are diagonal.
Supply right, demand left
a) Inexpensive new tools are developed which allow wood to be shaped and polished much
faster than previously.
Supply curve goes right
b) Popular artists are photographed carrying their instruments in handmade wood instrument
cases, and the photos are well-publicized.
Demand goes right, supply

c) Metal instrument cases improve remarkably in quality and appearance, while maintaining the
same price.
Demand goes right, price goes down

d) Major forest fires lead to sharp limitations on the amount of wood which can be cut, which in
turn leads to the price of wood tripling.
Supply goes left demand goes right
Part IV: short & long run:

1) In the short run, a large, permanent increase in demand for bicycles will result in bicycles
becoming more expensive. However, in the long run, this higher price will fall substantially.
Illustrate this with supply and demand curves.

2) In the short run, a large, permanent increase in demand for authentic medieval tapestries
becoming more expensive. In the long run, this higher price will not fall at all. Illustrate this
with supply and demand curves, and then explain why the medieval tapestries market functions
differently from the bicycle market in #1