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When completing the SWAs, make sure to follow these submission guidelines. Failing to follow these instructions will result in a grade of zero.
Your assignment should be typed, not hand-written.
Do not include your name or UFID anywhere in the SWA or file name.
Submit your SWA as a PDF file.
The SWA prompt will ask you to include a graph. You MUST include this graph to get full credit for the SWA. You should hand-draw your graph and scan a clear picture of it to embed in your assignment document. Your hand-drawn graph must be clear and precise. Otherwise, I cannot award credit. When drawing your graph, you must:
Use graph paper and a ruler to construct your graph.
Label both axes and all curves.
Identify the specific values of important intercepts and intersection points.
The figure attatched depicts the market for corn. Suppose corn is a normal good and people’s incomes increase. Also suppose the price of the fertilizer used to grow corn increases. The effect of the increase in income shifts the relevant curve by 20,000 bushels of corn at every price. The effect of the increase in the price of the fertilizer shifts the relevant curve by 10,000 bushels of corn at every price.
If a curve shifts in response to the change in income, clearly tell which curve and what direction (right or left) while if neither curve shifts give that as your answer. If a curve shifts in response to the change in the price of the fertilizer, again clearly tell which curve and what direction (right or left) but if neither curve shifts, then give that as your answer. Report the new equilibrium price of a bushel of corn and the new equilibrium quantity. Using JUST the initial equilibrium price and quantity and the new equilibrium price and quantity, can you calculate the price elasticity of demand? If so, what does it equal; if not, explain why not.
In your essay, you should embed a graph that clearly depicts (1) the correct shift(s), (2) the new equilibrium price and the equilibrium quantity.
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