,Besanko Se& SeBraeutigam Se– SeMicroeconomics, Se6th Solutions
Chapter 1
Se edition
Se
Se Manual
Analyzing Economic Problems
Se Se
Solutions to Review Questions
Se Se Se
1. What Seis Sethe Sedifference Sebetween Semicroeconomics Seand Semacroeconomics?
Microeconomics Sestudies Sethe Seeconomic Sebehavior Seof Seindividual Seeconomic Sedecision Semakers, Sesuch Seas
S e a Seconsumer, Sea Seworker, Sea Sefirm, Seor Sea Semanager. S e Macroeconomics Sestudies Sehow Sean Seentire
Senational S e economy Seperforms, Seexamining Sesuch Setopics Seas Sethe Seaggregate Selevels Seof Seincome Seand
Seemployment, S e the Selevels Seof Seinterest Serates Seand Seprices, Sethe Serate Seof Seinflation, Seand Sethe Senature Seof
Sebusiness Secycles.
2. Why Seis Seeconomics Seoften Sedescribed Seas Sethe Sescience Seof Seconstrained Sechoice?
While Seour Sewants Sefor Segoods Seand Seservices Seare Seunlimited, Sethe Seresources Senecessary Seto Seproduce
Sethose S e goods Seand Seservices, Sesuch Seas Selabor, Semanagerial Setalent, Secapital, Seand Seraw Sematerials, Seare
Se“scarce” S e because Setheir Sesupply Seis Selimited. S e This Sescarcity Seimplies Sethat Sewe Seare Seconstrained Sein Sethe
Sechoices Sewe S e can Semake Seabout Sewhich Segoods Seand Seservices Seto Seproduce. S e Thus, Seeconomics Seis
Seoften Sedescribed Seas Sethe S e science Seof Seconstrained Sechoice.
3. How Sedoes Sethe Setool Seof Seconstrained Seoptimization Sehelp Sedecision Semakers Semake Sechoices?
S e What Seroles Sedo Sethe Seobjective Sefunction Seand Seconstraints Seplay Sein Sea Semodel Seof Seconstrained
S e optimization?
Constrained Seoptimization Seallows Sethe Sedecision Semaker Seto Seselect Sethe Sebest Se(optimal) Sealternative Sewhile
accounting Sefor Seany Sepossible Selimitations Seor Serestrictions Seon Sethe Sechoices. S e The Seobjective Sefunction
S e represents Sethe Serelationship Seto Sebe Semaximized Seor Seminimized. S e For Seexample, Sea Sefirm’s Seprofit Semight
Sebe S e the Seobjective Sefunction Seand Seall Sechoices Sewill Sebe Seevaluated Sein Sethe Seprofit Sefunction Seto Sedetermine
Sewhich S e yields Sethe Sehighest Seprofit. S e The Seconstraints Seplace Selimitations Seon Sethe Sechoice Sethe Sedecision
Semaker Secan S e select Seand Sedefines Sethe Seset Seof Sealternatives Sefrom Sewhich Sethe Sebest Sewill Sebe Sechosen.
4. Suppose Sethe Semarket Sefor Sewheat Seis Secompetitive, Sewith Sean Seupward-sloping Sesupply
Securve, S e a Sedownward-sloping Sedemand Securve, Seand Sean Seequilibrium Seprice Seof Se$4.00 Seper
Sebushel. SeWhy S e would Sea Sehigher Seprice Se(e.g., Se$5.00 Seper Sebushel) Senot Sebe Sean Seequilibrium
Seprice? SeWhy Sewould Sea S e lower Seprice Se(e.g.,
$2.50 Seper Sebushel) Senot Sebe Sean Seequilibrium Seprice?
If Sethe Seprice Sein Sethe Semarket Sewas Seabove Sethe Seequilibrium Seprice, Seconsumers Sewould Sebe Sewilling Seto
S e purchase Sefewer Seunits Sethan Sesuppliers Sewould Sebe Sewilling Seto Sesell, Secreating Sean Seexcess Sesupply. S e As
S e suppliers Serealize Sethey Seare Senot Seselling Sethe Seunits Sethey Sehave Semade Seavailable, Sesellers Sewill Sebid
Sedown Sethe
Copyright Se© Se2014 SeJohn SeWiley Se& SeSons, Chapter Se1 Se- Se
SeInc. 2
,Besanko Se& SeBraeutigam Se– SeMicroeconomics, Se6th Solutions
Se edition Se Manual
price Seto Seentice Semore Seconsumers Seto Sepurchase Setheir Segoods Seor Seservices. S e By Sedefinition, Seequilibrium
Seis S e a Sestate Sethat Sewill Seremain Seunchanged Seas Selong Seas Seexogenous Sefactors Seremain Seunchanged. SeSince
Sein Sethis S e case Sesuppliers Sewill Selower Setheir Seprice, Sethis Sehigh Seprice Secannot Sebe Sean Seequilibrium.
When Sethe Seprice Seis Sebelow Sethe Seequilibrium Seprice, Seconsumers Sewill Sedemand Semore Seunits Sethan
Sesuppliers S e have Semade Seavailable. SeThis Seexcess Sedemand Sewill Seentice Seconsumers Seto Sebid Seup Sethe
Seprices Seto Sepurchase S e the Selimited Seunits Seavailable. S e Since Sethe Seprice Sewill Sechange, Seit Secannot Sebe Sean
Seequilibrium.
5. What Seis Sethe Sedifference Sebetween Sean Seexogenous Sevariable Seand Sean Seendogenous
Sevariable S e in Sean Seeconomic Semodel? SeWould Seit Seever Sebe Seuseful Seto Seconstruct Sea Semodel Sethat
Secontained Seonly S e exogenous Sevariables Se(and Seno Seendogenous Sevariables)?
Exogenous Sevariables Seare Setaken Seas Segiven Sein Sean Seeconomic Semodel, Sei.e., Sethey Seare Sedetermined Seby
Sesome S e process Seoutside Sethe Semodel, Sewhile Seendogenous Sevariables Seare Sedetermined Sewithin Sethe
Seeconomic S e model Sebeing Sestudied. SeAn S e economic S e model Se that S e contained S e no S e endogenous
S e variables S e would S e not S e be S e very S e interesting. S e With S e no Seendogenous Sevariables, Senothing Sewould
Sebe Sedetermined Seby Sethe Semodel Seso Seit Sewould Senot Seserve Semuch S e purpose.
6. Why Sedo Seeconomists Sedo Secomparative Sestatics Seanalysis? SeWhat Serole Sedo
Seendogenous Sevariables Seand Seexogenous Sevariables Seplay Sein Secomparative Sestatics
Seanalysis?
Comparative Sestatics Seanalyses Seare Seperformed Seto Sedetermine Sehow Sethe Selevels Seof Seendogenous Sevariables
S e change S e as Sesome Seexogenous Sevariable Seis Sechanged. S e This Setype Seof Seanalysis Seis Severy Seimportant
Sesince Sein S e the Sereal Seworld Sethe Seexogenous Sevariables, Sesuch Seas Seweather, Sepolicy Setools, Seetc. Seare Sealways
Sechanging S e and Seit Seis Seuseful Seto Seknow Sehow Sechanges Sein Sethese Sevariables Seaffect Sethe Selevels Seof Seother,
Seendogenous, S e variables. S e An Seexample Seof Secomparative Sestatics Seanalysis Sewould Sebe Seasking Sethe
Sequestion: SeIf S e extraordinarily Selow Serainfall Se(an Seexogenous Sevariable) Secauses S e a Se30 Sepercent
Sereduction Sein Secorn Sesupply, S e by Sehow Semuch Sewill Sethe Semarket Seprice Sefor Secorn Se(an Seendogenous
Sevariable) Seincrease?
7. What Seis Sethe Sedifference Sebetween Sepositive Seand Senormative Seanalysis? SeWhich
Seof Sethe Sefollowing Sequestions Sewould Seentail Sepositive Seanalysis, Seand Sewhich
Senormative Seanalysis?
a) What Seeffect Sewill SeInternet Seauction Secompanies Sehave Seon Sethe Seprofits Seof Selocal
Seautomobile Sedealerships?
b) Should Sethe Segovernment Seimpose Sespecial Setaxes Seon Sesales Seof Semerchandise Semade
Seover Sethe SeInternet?
Positive Seanalysis Seattempts Seto Seexplain Sehow Sean Seeconomic Sesystem Seworks Seor Seto Sepredict Sehow Seit Sewill
S e change Seover Setime Seby Seasking Seexplanatory Seor Sepredictive Sequestions. S e Normative Seanalysis Sefocuses
Seon S e what Seshould Sebe Sedone Seby Seasking Seprescriptive Sequestions.
Copyright Se© Se2014 SeJohn SeWiley Se& SeSons, Chapter Se1 Se- Se
SeInc. 3
, Besanko Se& SeBraeutigam Se– SeMicroeconomics, Se6th Solutions
Se edition Se Manual
a) Because Sethis Sequestion Seasks Sewhether Sedealership Seprofits Sewill Sego Seup Seor Sedown Se(and
Seby S e how Semuch) Se– Sebut Serefrains Sefrom Seinquiring Seas Seto Sewhether Sethis Sewould Sebe
Sea Segood Sething
– Seit Seis Sean Seexample Seof Sepositive Seanalysis.
b) On Sethe Seother Sehand, Sethis Sequestion Seasks Sewhether Seit Seis Sedesirable Seto Seimpose
Setaxes Seon SeInternet Sesales, Seso Seit Seis Senormative Seanalysis. S e Notably, Sethis Sequestion
Sedoes Senot Seask S e what Sethe Seeffect Seof Sesuch Setaxes Sewould Sebe.
Solutions to Problems
Se Se
1.1 Discuss Sethe Sefollowing Sestatement: Se“Since Sesupply Seand Sedemand Securves Seare
Sealways Seshifting, Semarkets Senever Seactually Sereach Sean Seequilibrium. SeTherefore, Sethe Seconcept
Seof S e equilibrium Seis Seuseless.”
While Sethe Seclaim Sethat Semarkets Senever Sereach Sean Seequilibrium Seis Seprobably Sedebatable, Seeven Seif Semarkets
S e do Senot Seever Sereach Seequilibrium, Sethe Seconcept Seis Sestill Seof Secentral Seimportance. S e The Seconcept Seof
S e equilibrium Seis Seimportant Sebecause Seit Seprovides Sea Sesimple Seway Seto Sepredict Sehow Semarket Seprices Seand
S e quantities Sewill Sechange Seas Seexogenous Sevariables Sechange. S e Thus, Sewhile Sewe Semay Senever Sereach Sea
S e particular Seequilibrium Seprice, Sesay Sebecause Sea Sesupply Seor Sedemand Seschedule Seshifts Seas Sethe Semarket
Semoves S e toward Seequilibrium, Sewe Secan Sepredict Sewith Serelative Seease, Sefor Seexample, Sewhether Seprices Sewill
Sebe Serising S e or Sefalling Sewhen Seexogenous Semarket Sefactors Sechange Seas Sewe Semove Setoward Seequilibrium.
S e As S e exogenous Sevariables Secontinue Seto Sechange, Sewe Secan Secontinue Seto Sepredict Sethe Sedirection Seof
Sechange Sefor Se the Seendogenous Sevariables, Seand Sethis Seis Senot Se“useless.”
1.2 In Sean Searticle Seentitled, Se“Corn SePrices SeSurge Seon SeExport SeDemand, SeCrop SeData,” SeThe
SeWall S e Street SeJournal Seidentified Seseveral Seexogenous Seshocks Sethat Sepushed SeU.S. Secorn Seprices
Sesharply S e higher.(See Sethe Searticle Seby SeAaron SeLucchetti, SeAugust Se22, Se1997, Sep. SeC17. Seon Senational Seincome.)
SeSuppose Sethe SeU.S. S e market Sefor Secorn Seis Secompetitive, Sewith Sean Seupward-sloping Sesupply
Securve Seand Sea Sedownward- S e sloping Sedemand Securve. SeFor Seeach Seof Sethe Sefollowing Sescenarios,
Seillustrate Segraphically Sehow Sethe S e exogenous Seevent Sedescribed Sewill Secontribute Seto Sea Sehigher
Seprice Seof Secorn Sein Sethe SeU.S. Semarket.
a) The SeU.S. SeDepartment Seof SeAgriculture Seannounces Sethat Seexports Seof Secorn Seto
SeTaiwan Seand SeJapan Sewere Se“surprisingly Sebullish,” Searound Se30 Sepercent Sehigher Sethan
Sehad Sebeen Seexpected.
b) Some Seanalysts Seproject Sethat Sethe Sesize Seof Sethe SeU.S. Secorn Secrop Sewill Sehit Sea Sesix-year Selow
Sebecause Seof S e dry Seweather.
c) The Sestrengthening Seof SeEl SeNiño, Sethe Semeteorological Setrend Sethat Sebrings Sewarmer Seweather
Seto S e the Sewestern Secoast Seof SeSouth SeAmerica, Sereduces Secorn Seproduction Seoutside Sethe SeUnited
SeStates, S e thereby Seincreasing Seforeign Secountries’ Sedependence Seon Sethe SeU.S. Secorn Secrop.
Copyright Se© Se2014 SeJohn SeWiley Se& SeSons, Chapter Se1 Se- Se
SeInc. 4
Chapter 1
Se edition
Se
Se Manual
Analyzing Economic Problems
Se Se
Solutions to Review Questions
Se Se Se
1. What Seis Sethe Sedifference Sebetween Semicroeconomics Seand Semacroeconomics?
Microeconomics Sestudies Sethe Seeconomic Sebehavior Seof Seindividual Seeconomic Sedecision Semakers, Sesuch Seas
S e a Seconsumer, Sea Seworker, Sea Sefirm, Seor Sea Semanager. S e Macroeconomics Sestudies Sehow Sean Seentire
Senational S e economy Seperforms, Seexamining Sesuch Setopics Seas Sethe Seaggregate Selevels Seof Seincome Seand
Seemployment, S e the Selevels Seof Seinterest Serates Seand Seprices, Sethe Serate Seof Seinflation, Seand Sethe Senature Seof
Sebusiness Secycles.
2. Why Seis Seeconomics Seoften Sedescribed Seas Sethe Sescience Seof Seconstrained Sechoice?
While Seour Sewants Sefor Segoods Seand Seservices Seare Seunlimited, Sethe Seresources Senecessary Seto Seproduce
Sethose S e goods Seand Seservices, Sesuch Seas Selabor, Semanagerial Setalent, Secapital, Seand Seraw Sematerials, Seare
Se“scarce” S e because Setheir Sesupply Seis Selimited. S e This Sescarcity Seimplies Sethat Sewe Seare Seconstrained Sein Sethe
Sechoices Sewe S e can Semake Seabout Sewhich Segoods Seand Seservices Seto Seproduce. S e Thus, Seeconomics Seis
Seoften Sedescribed Seas Sethe S e science Seof Seconstrained Sechoice.
3. How Sedoes Sethe Setool Seof Seconstrained Seoptimization Sehelp Sedecision Semakers Semake Sechoices?
S e What Seroles Sedo Sethe Seobjective Sefunction Seand Seconstraints Seplay Sein Sea Semodel Seof Seconstrained
S e optimization?
Constrained Seoptimization Seallows Sethe Sedecision Semaker Seto Seselect Sethe Sebest Se(optimal) Sealternative Sewhile
accounting Sefor Seany Sepossible Selimitations Seor Serestrictions Seon Sethe Sechoices. S e The Seobjective Sefunction
S e represents Sethe Serelationship Seto Sebe Semaximized Seor Seminimized. S e For Seexample, Sea Sefirm’s Seprofit Semight
Sebe S e the Seobjective Sefunction Seand Seall Sechoices Sewill Sebe Seevaluated Sein Sethe Seprofit Sefunction Seto Sedetermine
Sewhich S e yields Sethe Sehighest Seprofit. S e The Seconstraints Seplace Selimitations Seon Sethe Sechoice Sethe Sedecision
Semaker Secan S e select Seand Sedefines Sethe Seset Seof Sealternatives Sefrom Sewhich Sethe Sebest Sewill Sebe Sechosen.
4. Suppose Sethe Semarket Sefor Sewheat Seis Secompetitive, Sewith Sean Seupward-sloping Sesupply
Securve, S e a Sedownward-sloping Sedemand Securve, Seand Sean Seequilibrium Seprice Seof Se$4.00 Seper
Sebushel. SeWhy S e would Sea Sehigher Seprice Se(e.g., Se$5.00 Seper Sebushel) Senot Sebe Sean Seequilibrium
Seprice? SeWhy Sewould Sea S e lower Seprice Se(e.g.,
$2.50 Seper Sebushel) Senot Sebe Sean Seequilibrium Seprice?
If Sethe Seprice Sein Sethe Semarket Sewas Seabove Sethe Seequilibrium Seprice, Seconsumers Sewould Sebe Sewilling Seto
S e purchase Sefewer Seunits Sethan Sesuppliers Sewould Sebe Sewilling Seto Sesell, Secreating Sean Seexcess Sesupply. S e As
S e suppliers Serealize Sethey Seare Senot Seselling Sethe Seunits Sethey Sehave Semade Seavailable, Sesellers Sewill Sebid
Sedown Sethe
Copyright Se© Se2014 SeJohn SeWiley Se& SeSons, Chapter Se1 Se- Se
SeInc. 2
,Besanko Se& SeBraeutigam Se– SeMicroeconomics, Se6th Solutions
Se edition Se Manual
price Seto Seentice Semore Seconsumers Seto Sepurchase Setheir Segoods Seor Seservices. S e By Sedefinition, Seequilibrium
Seis S e a Sestate Sethat Sewill Seremain Seunchanged Seas Selong Seas Seexogenous Sefactors Seremain Seunchanged. SeSince
Sein Sethis S e case Sesuppliers Sewill Selower Setheir Seprice, Sethis Sehigh Seprice Secannot Sebe Sean Seequilibrium.
When Sethe Seprice Seis Sebelow Sethe Seequilibrium Seprice, Seconsumers Sewill Sedemand Semore Seunits Sethan
Sesuppliers S e have Semade Seavailable. SeThis Seexcess Sedemand Sewill Seentice Seconsumers Seto Sebid Seup Sethe
Seprices Seto Sepurchase S e the Selimited Seunits Seavailable. S e Since Sethe Seprice Sewill Sechange, Seit Secannot Sebe Sean
Seequilibrium.
5. What Seis Sethe Sedifference Sebetween Sean Seexogenous Sevariable Seand Sean Seendogenous
Sevariable S e in Sean Seeconomic Semodel? SeWould Seit Seever Sebe Seuseful Seto Seconstruct Sea Semodel Sethat
Secontained Seonly S e exogenous Sevariables Se(and Seno Seendogenous Sevariables)?
Exogenous Sevariables Seare Setaken Seas Segiven Sein Sean Seeconomic Semodel, Sei.e., Sethey Seare Sedetermined Seby
Sesome S e process Seoutside Sethe Semodel, Sewhile Seendogenous Sevariables Seare Sedetermined Sewithin Sethe
Seeconomic S e model Sebeing Sestudied. SeAn S e economic S e model Se that S e contained S e no S e endogenous
S e variables S e would S e not S e be S e very S e interesting. S e With S e no Seendogenous Sevariables, Senothing Sewould
Sebe Sedetermined Seby Sethe Semodel Seso Seit Sewould Senot Seserve Semuch S e purpose.
6. Why Sedo Seeconomists Sedo Secomparative Sestatics Seanalysis? SeWhat Serole Sedo
Seendogenous Sevariables Seand Seexogenous Sevariables Seplay Sein Secomparative Sestatics
Seanalysis?
Comparative Sestatics Seanalyses Seare Seperformed Seto Sedetermine Sehow Sethe Selevels Seof Seendogenous Sevariables
S e change S e as Sesome Seexogenous Sevariable Seis Sechanged. S e This Setype Seof Seanalysis Seis Severy Seimportant
Sesince Sein S e the Sereal Seworld Sethe Seexogenous Sevariables, Sesuch Seas Seweather, Sepolicy Setools, Seetc. Seare Sealways
Sechanging S e and Seit Seis Seuseful Seto Seknow Sehow Sechanges Sein Sethese Sevariables Seaffect Sethe Selevels Seof Seother,
Seendogenous, S e variables. S e An Seexample Seof Secomparative Sestatics Seanalysis Sewould Sebe Seasking Sethe
Sequestion: SeIf S e extraordinarily Selow Serainfall Se(an Seexogenous Sevariable) Secauses S e a Se30 Sepercent
Sereduction Sein Secorn Sesupply, S e by Sehow Semuch Sewill Sethe Semarket Seprice Sefor Secorn Se(an Seendogenous
Sevariable) Seincrease?
7. What Seis Sethe Sedifference Sebetween Sepositive Seand Senormative Seanalysis? SeWhich
Seof Sethe Sefollowing Sequestions Sewould Seentail Sepositive Seanalysis, Seand Sewhich
Senormative Seanalysis?
a) What Seeffect Sewill SeInternet Seauction Secompanies Sehave Seon Sethe Seprofits Seof Selocal
Seautomobile Sedealerships?
b) Should Sethe Segovernment Seimpose Sespecial Setaxes Seon Sesales Seof Semerchandise Semade
Seover Sethe SeInternet?
Positive Seanalysis Seattempts Seto Seexplain Sehow Sean Seeconomic Sesystem Seworks Seor Seto Sepredict Sehow Seit Sewill
S e change Seover Setime Seby Seasking Seexplanatory Seor Sepredictive Sequestions. S e Normative Seanalysis Sefocuses
Seon S e what Seshould Sebe Sedone Seby Seasking Seprescriptive Sequestions.
Copyright Se© Se2014 SeJohn SeWiley Se& SeSons, Chapter Se1 Se- Se
SeInc. 3
, Besanko Se& SeBraeutigam Se– SeMicroeconomics, Se6th Solutions
Se edition Se Manual
a) Because Sethis Sequestion Seasks Sewhether Sedealership Seprofits Sewill Sego Seup Seor Sedown Se(and
Seby S e how Semuch) Se– Sebut Serefrains Sefrom Seinquiring Seas Seto Sewhether Sethis Sewould Sebe
Sea Segood Sething
– Seit Seis Sean Seexample Seof Sepositive Seanalysis.
b) On Sethe Seother Sehand, Sethis Sequestion Seasks Sewhether Seit Seis Sedesirable Seto Seimpose
Setaxes Seon SeInternet Sesales, Seso Seit Seis Senormative Seanalysis. S e Notably, Sethis Sequestion
Sedoes Senot Seask S e what Sethe Seeffect Seof Sesuch Setaxes Sewould Sebe.
Solutions to Problems
Se Se
1.1 Discuss Sethe Sefollowing Sestatement: Se“Since Sesupply Seand Sedemand Securves Seare
Sealways Seshifting, Semarkets Senever Seactually Sereach Sean Seequilibrium. SeTherefore, Sethe Seconcept
Seof S e equilibrium Seis Seuseless.”
While Sethe Seclaim Sethat Semarkets Senever Sereach Sean Seequilibrium Seis Seprobably Sedebatable, Seeven Seif Semarkets
S e do Senot Seever Sereach Seequilibrium, Sethe Seconcept Seis Sestill Seof Secentral Seimportance. S e The Seconcept Seof
S e equilibrium Seis Seimportant Sebecause Seit Seprovides Sea Sesimple Seway Seto Sepredict Sehow Semarket Seprices Seand
S e quantities Sewill Sechange Seas Seexogenous Sevariables Sechange. S e Thus, Sewhile Sewe Semay Senever Sereach Sea
S e particular Seequilibrium Seprice, Sesay Sebecause Sea Sesupply Seor Sedemand Seschedule Seshifts Seas Sethe Semarket
Semoves S e toward Seequilibrium, Sewe Secan Sepredict Sewith Serelative Seease, Sefor Seexample, Sewhether Seprices Sewill
Sebe Serising S e or Sefalling Sewhen Seexogenous Semarket Sefactors Sechange Seas Sewe Semove Setoward Seequilibrium.
S e As S e exogenous Sevariables Secontinue Seto Sechange, Sewe Secan Secontinue Seto Sepredict Sethe Sedirection Seof
Sechange Sefor Se the Seendogenous Sevariables, Seand Sethis Seis Senot Se“useless.”
1.2 In Sean Searticle Seentitled, Se“Corn SePrices SeSurge Seon SeExport SeDemand, SeCrop SeData,” SeThe
SeWall S e Street SeJournal Seidentified Seseveral Seexogenous Seshocks Sethat Sepushed SeU.S. Secorn Seprices
Sesharply S e higher.(See Sethe Searticle Seby SeAaron SeLucchetti, SeAugust Se22, Se1997, Sep. SeC17. Seon Senational Seincome.)
SeSuppose Sethe SeU.S. S e market Sefor Secorn Seis Secompetitive, Sewith Sean Seupward-sloping Sesupply
Securve Seand Sea Sedownward- S e sloping Sedemand Securve. SeFor Seeach Seof Sethe Sefollowing Sescenarios,
Seillustrate Segraphically Sehow Sethe S e exogenous Seevent Sedescribed Sewill Secontribute Seto Sea Sehigher
Seprice Seof Secorn Sein Sethe SeU.S. Semarket.
a) The SeU.S. SeDepartment Seof SeAgriculture Seannounces Sethat Seexports Seof Secorn Seto
SeTaiwan Seand SeJapan Sewere Se“surprisingly Sebullish,” Searound Se30 Sepercent Sehigher Sethan
Sehad Sebeen Seexpected.
b) Some Seanalysts Seproject Sethat Sethe Sesize Seof Sethe SeU.S. Secorn Secrop Sewill Sehit Sea Sesix-year Selow
Sebecause Seof S e dry Seweather.
c) The Sestrengthening Seof SeEl SeNiño, Sethe Semeteorological Setrend Sethat Sebrings Sewarmer Seweather
Seto S e the Sewestern Secoast Seof SeSouth SeAmerica, Sereduces Secorn Seproduction Seoutside Sethe SeUnited
SeStates, S e thereby Seincreasing Seforeign Secountries’ Sedependence Seon Sethe SeU.S. Secorn Secrop.
Copyright Se© Se2014 SeJohn SeWiley Se& SeSons, Chapter Se1 Se- Se
SeInc. 4
