Answer Happy

1. Tom rents on a month-to-month basis an apartment that hecan barely afford, in a market where apartments are hard to find.His landlord announces that he is doubling the rent, effectiveimmediately. What is likely to be Tom’s short-run response (say,over the next few days or weeks)? What might be his likely long-runresponse (over the next few months)?
2. Consider a market for cherry. Suppose that a new diseasethat kills cherry trees appears. Illustrate this event on a supplyand demand graph? Which curve moves? What happens to price andquantity?