a.) The market supply curve of rubber erasers is given by QS = 35,000 + 2,000P. The demand for rubber erasers can be segmented into two components. The first component is the demand for rubber erasers by art students. This demand is given by qA = 17,000 - 250P. The second component is the demand for rubber erasers by all others. This demand is given by qO = 25,000 - 2000P. Derive the total market demand curve for rubber erasers. Find the equilibrium market price and quantity.
b.) Given the products below and the events that affect them, indicate what happens to demand or supply, and the equilibrium price and quantity. Identify the determinant of demand or supply that causes the shift and show the shifts graphically for each example.
i. Blue jeans. The wearing of blue jeans becomes less fashionable among consumers.
ii. Computers. Parts for making computers fall in price because of improvements in technology.
iii. Lettuce. El Nino produces heavy rains that destroy a significant portion of the lettuce crop.