AaBbCcDdEe AaBbCcDdEe AaBbCcD No Spacing Heading 1 Supply and Demand $650 $600 $

Question

AaBbCcDdEe AaBbCcDdEe AaBbCcD No Spacing Heading 1 Supply and Demand $650 $600 $550 ? $500 $450 $400 1 5 10 20 30 40 50 60 70 0 9 100 Quantity Supply Demand The supply and demand for tablets in a small town is above. That is, at $400, the only store in town, will supply 35 tablets, but 105 will be demanded. Answer the questions based on the graph above. a. The equilibrium price isand the equilibrium quantity is b. The highest price consumers are willing to pay for 15 units is producers are willing to supply 40 units is c. When the market price is $450, there is (surplus/shortage) whether there is a shortage or surplus and of how many units. d. When the market price is $550, there is (surplus/shortage) Indicate whether there is a shortage or surplus and of how many units e. If there is a price ceiling of $550 set by the town council, the number of tablets sold will be and the lowest price of units. Fill irn units. at Explain your answer in one sentence.

Explanation / Answer

Q1

a) Equilibrium price is $500 and quantity is 55 units. Equilibrium price and quantity is determined by the intersection of supply and demand curves.

b) The maximum consumers are willing to pay for 15 units is $575. The lowest price producers are willing to supply 40 units is $425.

c) When price is $450, quantity supplied is 45 units, quantity demanded is 80 units. The shortage is 80 - 45=35 units.

d) When price is $550, quantity supplied is 65 units, quantity demanded is 30 units. The surplus is 65 - 30=35 units.

e) $500 and 55 units, since price ceiling above market equilibrium is not binding.

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