17. Answer the next three questions based on the right-hand side demand and supply model for a business firm producing motorcycles. Assume that 300 motorcycles is the optimal and most profitable level of production for the firm. All dollars are in thousands. Price ($) 30 20 10 300 Motorcycles The equilibrium price is $ (a) What are the equilibrium price and quantity at the medium level of demand (D)? and the equilibrium quantity is motorcycles. (b) What will be the equilibrium price and quantity if there is a demand shock that unexpectedly lowers demand (DL)? The equilibrium price will be $ mi the equilibrium quantity will be motorcycles. (c) What can you conclude will happen to prices and output when this model is shocked by changes in demand? The price of motorcycles is (flexible, inflexible) in this model. A change in demand for motorcycles results in a price change to achieve equilibrium at the set quantity of motorcycles produced. We can conclude that the number of motorcycles produced stays constant but the price of motorcycles changes.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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17. Answer the next three questions based on the
right-hand side demand and supply model
for a business firm producing motorcycles.
Assume that 300 motorcycles is the optimal
and most profitable level of production for
Price ($)
30
20
the firm. All dollars are in thousands.
10
300
Motorcycles
(a) What are the equilibrium price and quantity at the medium level of demand (DM)?
The equilibrium price is $
and the equilibrium quantity is
motorcycles.
(b) What will be the equilibrium price and quantity if there is a demand shock that unexpectedly
lowers demand (DL)?
The equilibrium price will be $
mithe equilibrium quantity will be
motorcycles.
(c) What can you conclude will happen to prices and output when this model is shocked by changes
in demand?
The price of motorcycles is (flexible, inflexible) in this model. A change in demand for
motorcycles results in a price change to achieve equilibrium at the set quantity of
motorcycles produced. We can conclude that the number of motorcycles produced stays
constant but the price of motorcycles changes.
Transcribed Image Text:17. Answer the next three questions based on the right-hand side demand and supply model for a business firm producing motorcycles. Assume that 300 motorcycles is the optimal and most profitable level of production for Price ($) 30 20 the firm. All dollars are in thousands. 10 300 Motorcycles (a) What are the equilibrium price and quantity at the medium level of demand (DM)? The equilibrium price is $ and the equilibrium quantity is motorcycles. (b) What will be the equilibrium price and quantity if there is a demand shock that unexpectedly lowers demand (DL)? The equilibrium price will be $ mithe equilibrium quantity will be motorcycles. (c) What can you conclude will happen to prices and output when this model is shocked by changes in demand? The price of motorcycles is (flexible, inflexible) in this model. A change in demand for motorcycles results in a price change to achieve equilibrium at the set quantity of motorcycles produced. We can conclude that the number of motorcycles produced stays constant but the price of motorcycles changes.
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