Macro Econ 1101

7. For each of the following situations, sketch the demand

curve as accurately as possible.

a. Appendectomy is a life-saving operation that some

people need. Regardless of the price, the quantity de­

mand is 300,000 every year.

b. For any price above $5 absolutely nobody will buy

your lemonade, but for any price below $5 you find that you are able to sell as much lemonade as you like.

c. There is only one buyer. For any price above $100 this

buyer wants nothing. For any price at or below $100

this buyer wants exactly 20 units.

8. Land in Sonoma, California, can be used either to grow

grapes for pinot noir wine or to grow Gravenstein apples.

The demand for pinot noir shifts sharply and permanently

to the right. What will be the effect of the rightward shift

in demand for pinot noir on the equilibrium price and

quantity of Gravenstein apples?