6. In Carfree Town the citizens can travel by bicycle or skateboard. Aluminium is an input tobicycles and wood is an input to skateboards. Assume that the markets for bicycles andskateboards are both perfectly competitive.A decrease in the price of wood used to make skateboards would:a) Increase the equilibrium price of bicycles, and increase the equilibrium quantity traded ofskateboardsb) Decrease the equilibrium price of bicycles, and decrease the equilibrium quantity traded ofskateboardsc) Increase the equilibrium quantity traded of bicycles, and decrease the equilibrium price ofskateboardsd) Increase the equilibrium price of bicycles, and increase the equilibrium price of skateboardse) Decrease the equilibrium quantity traded of bicycles, and increase the equilibrium quantitytraded of skateboards 5. Consider the following perfectly competitive market for a good:Qs = 30 + 6PQD = 150-6PNow suppose that supply increases by 36 at each price (for example, now at P = 0, Qs = 66).After the increase in supply - which of the following is correct?a) The equilibrium price decreases by $3, and the quantity traded increases by 18b) The equilibrium price decreases by $8, and the quantity traded decreases by 18c) The equilibrium price decreases by $3, and the quantity traded decreases to 108

Since you have given multiple questions, we will solve the first question (Question 5) for you. If…

5. Consider the following perfectly competitive market for a good: Qs = 30 + 6P QD = 150-6P Now suppose that supply increases by 36 at each price (for example, now at P = 0, Qs = 66). After the increase in supply - which of the following is correct? a) The equilibrium price decreases by $3, and the quantity traded increases by 18 b) The equilibrium price decreases by $8, and the quantity traded decreases by 18 c) The equilibrium price decreases by $3, and the quantity traded decreases to 108

5. Consider the following perfectly competitive market for a good: Qs = 30 + 6P QD = 150-6P Now suppose that supply increases by 36 at each price (for example, now at P = 0, Qs = 66). After the increase in supply - which of the following is correct? a) The equilibrium price decreases by $3, and the quantity traded increases by 18 b) The equilibrium price decreases by $8, and the quantity traded decreases by 18 c) The equilibrium price decreases by $3, and the quantity traded decreases to 108

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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