. Suppose the following events occur in the market

1. Suppose the following events occur in the market for orange juice. In each case, graph both the supply and demand curves and show the shift that would occur. For each, briefly explain WHY the curve will shift in the direction graphed.

a. Consumer incomes decrease.

b. New technology decreases production costs.

c. The price of bacon decreases (assume bacon is a complementary good)

d. An additional per-unit tax is placed on sales of orange juice.

2. Suppose apple juice is a substitute good for orange juice.

a. Graph a Supply and Demand curve for orange juice. Label the equilibrium as P* and Q*.

b. Now suppose the price of apple juice decreases. In the above graph, show the resulting shift that would occur in the market for orange juice.

c. At the original price P*, would there now be excess demand or excess supply?

d. Would this cause the price of orange juice to increase or decrease?

e. As prices adjust what happens to the supply curve? Will producers produce more or less orange juice?

Thank you very much.