Bedrock company has $70 million in debt and $30 million in equity. the debt matures in 1 year and has a 10% interest rate, so the company is promising to pay back $7 million to its debt holders 1 year from now. the company is considering two possible investments, each of which will require an upfront cost of $100 million. each investment will last for 1 year, and the payoff from each investment depends on the strength of the overall economy. there is a 50% chance that the economy will be weak and a 50% chance it will be strong.

Ange in supply or (ii) a movement along the supply curve. a. during a real estate boom that causes house prices to rise, more homeowners put their houses up for sale. b. many strawberry farmers open temporary roadside stands during harvest season, even though prices are usually low at that time. c. immediately after the school year begins, fewer young people are available to work. fast-food chains must raise wages, which represent the price of labor, to attract workers. d. many construction workers temporarily move to areas that have suffered hurricane damage, lured by higher wages. e. since new technologies have made it possible to build larger cruise ships (which are cheaper to run per passenger), caribbean cruise lines have offered more cabins, at lower prices, than before. 2. in the following three situations, the market is initially in equilibrium. after each event described below, does a surplus or shortage exist at the original equilibrium price? what will happen to the equilibrium price as a result? a. in 2010 there was a bumper crop of wine grapes. b. after a hurricane, florida hoteliers often find that many people cancel their upcoming vacations, leaving them with empty hotel rooms. c. after a heavy snowfall, many peop