Which of the following situations would necessarily lead to a fall in the price of automobiles?

1. An increase in the cost of an input such as steel with no change in demand
2. An increase in the demand for automobiles occurs at the same time that there is an expansion in the supply of automobiles
3. A decrease in the demand for automobiles with no change in supply
4. An increase in wage costs at automobile factories
5. A reduction in the cost of an input such as steel at the same time that there is an expansion in the demand for automobiles

A price floor set below equilibrium is most likely to have which of the following effects on the market in the long run?

1. No effect
2. Surplus
3. Shortage
4. Increase in price
5. Decrease in price

Consider the following information about the market for ice cream cones:

1. Draw the demand and supply curves for ice cream and report the equilibrium price and quantity.
2. If the cost of milk (an input cost of ice cream) were to increase, explain how this event will affect the equilibrium price and quantity of ice cream sold on the market.
3. Suppose a price ceiling were set at $2.00 per cone. Will this lead to a shortage, surplus, or no effect on the market for ice cream? If it leads to a shortage or surplus, calculate it.
4. Suppose now that the new demand schedule for ice cream is now given to you. Graph the new demand curve on the same graph you produced in part (a).
5. What is the new equilibrium price and quantity?
6. Provide an example of what might have caused this change in the demand for ice cream and explain.