Table 4-10 The following table shows the number of cases of water cach seller is

ID: 1135762 • Letter: T

Question

Table 4-10 The following table shows the number of cases of water cach seller is willing to sell at the prices listed. rice per case Alpine Springs Brook Mountain Cascade Waters Dew Good 0.00 3.00 6,00 9.00 cases 00 cases 00 cases 300 cases )cases 100 cases 200 cases 00 cases cases cases 20 cases 180 cases 80 cases 120 cases Refer to Table 4-10. If the four suppliers listed are the only suppliers in this market and the market demand schedule is: rice Quantity Demanded 0.00 200 3.00 6.00 9.00 300 the equilibrium price and quantity ane $9.00 and 600 cases $0.00 and 1200 cases $6.00 and 600 cases $3.00 and 300 cases

Explanation / Answer

(Question 1) Option (3).

Market supply is the horizontal summation of individual supply schedules, derived as below.

Price ($)

Alpine's Supply

Brook's Supply

Cascade's Supply

Dew's Supply

Market Supply

Market Demand

1200

100

300

900

200

120

200

600

300

120

180

300

900

300

In equilibrium, market demand equals market supply. So, equilibrium quantity is 600 & price is $6.

(Question 2) Option (4)

When price of a good increases, the immediate response of consumers is to decrease quantity demanded, so elasticity is higher. But as time passes, consumers get more "Used to" the price change, so they become less responsive to the price increase, and elasticity is lower.

(Question 3) Option (A)

Initial equilibrium point A is at intersection of D1 & S1 curves. If price of a complementary good increases, demand for the good in question decreases, shifting its demand curve leftward to D2, intersecting S1 at new equilibrium point D.

(Question 4) Option (c)

When price is $2, firm A supplies 3 units and firm B supplies 4 units, so market quantity supplied is (3 + 4) = 7 units. Closest option is (c).

(Question 5) Option (4)

When price is $8, quantity demanded = 20 but quantity supplied = 45, so Surplus = 45 - 20 = 25. As a result price will fall.