Figure 1.117 shows supply and demand curves. (a) What is the equilibrium price for this
Chapter 1, Problem 34(choose chapter or problem)
Figure 1.117 shows supply and demand curves. (a) What is the equilibrium price for this product? At this price, what quantity is produced? (b) Choose a price above the equilibrium pricefor example, p = 300. At this price, how many items are suppliers willing to produce? How many items do consumers want to buy? Use your answers to these questions to explain why, if prices are above the equilibrium price, the market tends to push prices lower (toward the equilibrium). (c) Now choose a price below the equilibrium price for example, p = 200. At this price, how many items are suppliers willing to produce? How many items do consumers want to buy? Use your answers to these questions to explain why, if prices are below the equilibrium price, the market tends to push prices higher (toward the equilibrium). Demand Supply 250 500 750 1000 1250 100 200 300 400 500 600 700 q (quantity) p (price per unit) Figure 1.117 3
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