Overview
Week 5 Assignment – ECN501
Cotton Prices, Hand Sanitizer, and Valentine’s Day- The “A” index is a proxy for the world price of cotton.From January 2010 to October of 2010, the price reflected by the “A” index increased about 80%.
- Provide two separate explanations for this price increase using shifts in supply or demand.
- What one piece of information would allow you to decide which of the two is a better explanation?
- Due to the COVID19 outbreak, the demand for hand sanitizer tripled. Should Johnson & Johnson increase production of their Purell hand sanitizer? Should it invest in doubling production capacity?
- On Valentine’s Day, the price of roses increases by more than the price of greeting cards. Why? (Hint: Consider what makes roses and cards different and how that difference might affect supply’s responsiveness to price.)