Name 1)S & DI reach an equilibrium at S--& Q 2)S & D2 reach an equilibrium at $
ID: 1144640 • Letter: N
Question
Name 1)S & DI reach an equilibrium at S--& Q 2)S & D2 reach an equilibrium at $ & Q- Ch. 3 4pts.@ Please use points inside the graph only. 3)Starting at $4.50 & 15q, more Quantity demanded is shown by $4 & 20q or S--& Q- 4)If starting at $2 & 20q less Quantity demanded is shown by S--& Q- 5)Starting at S4.50 & 15q, less demand is shown by S3 & 10q or S--& Q 6)Starting at $4.50 & 15q, more Quantity supplied is shown by S--& Q 7)Starting at $4.50 & 15q, less Quantity supplied is shown by $--& Q- 8)If gov. mandates a $3 price, then quantity supplied will be--q and to D2 quantity demanded q-with the difference between the two being a surplus/shortage of 9)If gov. mandates a $3 price BUT this time toD, quantity supplied again will be q and quantity demanded to D1 also q- resulting in a surplus/shortage/equilibrium. 10)f gov. mandates a 20q quota to S & D2, then the cost for each unit to S will be $ and price needed for D2 to buy all 20q is $ with the difference between the two being S and a potential subsidy to be paid for by a third party, (say,flu shots subsidized by the Dept of Health) 11)If demand falls later to D1 then the market clearing price for the mandatory 20q is now $ versus the $6 cost ea ch makes for a subsidy of $ each times 20q for a total subsidy of S- D2 4 3 2 D1 0 10 15 20 answers: 2 223333 4 4 4.50 6 6 10 10 10 10 10 10 15 20 20 20 30 30 80 equilibrium shortageExplanation / Answer
Equilibrium is achieved when supply and demand are equal to each other.
1) S and D1 are equal when the price is $3 and quantity is 10 units
2) S and D2 are equal when the price is $4.5 and the quantity is 15 units
3) When price is further reduced to $3, then the quantity will increase to 30 units. For this you need to travel along the relevant demand curve D2
4) When price is increased to $3, the quantity is reduced to 10 units and this will be true for the relevant demand curve D1
5) Here less demand is asked which means we can shift in between the demand curves. From 4.50 to 3, the price is reduced and from 15 to 10 the quantity is reduced. Hence any price and quantity between these values will do the work. This includes a price of 4 and a quantity of 14.
6) This is $6 and 20 units because you need to travel along the supply curve S. More quantity supplied means travelling upwards
7) This is $3 and 10 units because you need to travel along the supply curve S. Less quantity supplied means travelling downwards
8) When price is fixed at $3, quantity supplied is 10 units and quantity demanded is 30 units. hence there is a shortage of 20 units.
9) When price is $3 in case of D1 we see that this is the equilibrium price. At this price quantity supplied and demanded is same and equal to 10 units
10) When quota is 20, domestic price at S is $6 while the price for settlement at D2 is $4. Hence there is a subsidy required to be paid to the suppliers which is equal to $6 - $4 = $2.
11) When demand is D1, new price that settles the market is $2 and so the new subsidy is $6 - $2 = $4. Total subsidy is 4*20 = $80.
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