# EquilibriumThe following table shows the real output demanded and supplied at various price levels in a hypothetical economy.| Real Output Demanded (Billions of dollars) | Price Level (Index number) | Real Output Supplied (Billions of dollars) ||--------------------------------------------|----------------------------|---------------------------------------------|| 10 | 90 | 140 || 20 | 60 | 130 || 40 | 30 | 100 || 80 | 20 | 80 || 140 | 10 | 20 |## Instructions for GraphingOn the following graph, use the blue points (circle symbols) to plot the aggregate demand (Initial AD) curve for the economy. Then use the orange points (square symbols) to plot the short-run aggregate supply (SRAS) curve for the economy.**Note:** Line segments will automatically connect the points.### Graph ExplanationThe graph represents the relationship between the price level and real output in the form of aggregate demand and short-run aggregate supply curves.- **Initial AD Curve (Blue Circles):** Represents the various quantities of real GDP demanded at different price levels.- **SRAS Curve (Orange Squares):** Represents the quantities of real GDP supplied at those price levels in the short run.The vertical axis of the graph measures the price level (Index number), and the horizontal axis measures real output (Billions of dollars).This graph helps visualize how changes in price levels can affect the quantity of goods and services demanded and supplied in an economy, leading to an equilibrium price level and output. ### Transcription for Educational Website**Graph Description:**The graph illustrates the relationship between Price Level (in Billions of dollars) and Real GDP (Index numbers). It features three curves:- **Initial AD (Aggregate Demand):** Represented by blue circle points.- **SRAS (Short-Run Aggregate Supply):** Represented by yellow square points.- **New AD (Aggregate Demand after change):** Represented by purple diamond points.The horizontal axis indicates Real GDP in index numbers ranging from 0 to 200. The vertical axis shows the Price Level in billions of dollars, ranging from 0 to 100.**Text Analysis:**- The equilibrium price level is indicated at an unspecified value, and the equilibrium level of real output is also unspecified.- A government spending increase of $20 billion is assumed, with an expenditure multiplier of 3.- Instruction: On the graph, use the purple points (diamond symbols) to demonstrate the effect of increased government spending on the New AD curve.- Filling out: The change in government spending affects the equilibrium level of real output by an unspecified amount. This scenario shows how fiscal policy, such as government spending, can influence aggregate demand and subsequently impact economic equilibrium.

We know that at equilibrium, Aggregate demand always equals aggregate supply. In the given schedule,…

2. Equilibrium The following table shows the real output demanded and supplied at various price levels in a hypothetical economy. Real Output Demanded Price Level Real Output Supplied (Billions of dollars) (Billions of dollars) (Index number) (Billions of dollars) 10 90 140 20 60 130 40 30 100 80 20 80 140 10 20

2. Equilibrium The following table shows the real output demanded and supplied at various price levels in a hypothetical economy. Real Output Demanded Price Level Real Output Supplied (Billions of dollars) (Billions of dollars) (Index number) (Billions of dollars) 10 90 140 20 60 130 40 30 100 80 20 80 140 10 20

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2. Assume that the equilibrium price is at $3 and equilibrium quantity is at 40 units of a product. Then, imagine that suddenly any of determinants of demand, other than price of the product, caused demand to decrease while at the same time one of the determinants of supply, other than the price of the product, caused supply to increase. TASK: First, draw the demand and supply graph to show the original equilibrium price at $3 and equilibrium quantity at 40 units. Second pick ONE different DETERMINANT of DEMAND and ONE different DETERMINANT of SUPPLY Third, show in the graph what it looked like if demand decreased and supply increased (select where you think that the new price and quantity would change to), what the new equilibrium price and equilibrium quantity would be, after both changes in demand and supply occurred. Fourth, in a couple of words, write down what would be that YOUR new equilibrium price and equilibrium quantity. [That is, tell us that the original equilibrium price…
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11. List basic determinants of increase in market supply. The supply increases when, (a) Resource or input prices: (increase, decrease) (b) Changes in technology: ( improvement, deterioration ) (c) Taxes: ( increase, decrease ) (d) Subsidies: ( increase, decrease ) (e) Prices of other related goods or products: ( increase, decrease ), if there is a substitution in production (f) Number of sellers: (increases, decreases )
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3. Draw and explain increase in supply with the help of table given below. Price (RO) Quantity Supplied (S) Increase in Quantity Supplied (S1) 1 10 2 15 3 20 4 25 15 20 25 30
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