6. Suppose the supply and demand schedules for bicycles are as follows: Quantity Demanded per Year 20,000,000 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 Price $160 $200 $240 $280 $320 $360 Quantity Supplied per Year 12,000,000 14,000,000 16,000,000 18,000,000 20,000,000 22,000,000 a. Graph these curves and show the equilibrium price and quantity. b. Now suppose that is becomes unfashionable to ride a bicycle, so the quantity demanded at each price falls by 4 million bikes per year. What is the new equilibrium price and quantity? Show this solution graphically. Explain why the quantity falls by less than 4 million bikes per year. c. Suppose instead that several major bicycle producers go out of business, thereby reducing the quantity supplied by 4 million bikes at every price. Find the equilibrium price and quantity, and show is graphically. Explain why the quantity falls by less than 4 million.

6. Suppose the supply and demand schedules for bicycles are as follows: Quantity Demanded per Year 20,000,000 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 Price $160 $200 $240 $280 $320 $360 Quantity Supplied per Year 12,000,000 14,000,000 16,000,000 18,000,000 20,000,000 22,000,000 a. Graph these curves and show the equilibrium price and quantity. b. Now suppose that is becomes unfashionable to ride a bicycle, so the quantity demanded at each price falls by 4 million bikes per year. What is the new equilibrium price and quantity? Show this solution graphically. Explain why the quantity falls by less than 4 million bikes per year. c. Suppose instead that several major bicycle producers go out of business, thereby reducing the quantity supplied by 4 million bikes at every price. Find the equilibrium price and quantity, and show is graphically. Explain why the quantity falls by less than 4 million.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

6. Suppose the supply and demand schedules for bicycles are as follows:
Quantity Demanded per Year
20,000,000
18,000,000
Price
$160
$200
$240
$280
$320
$360
16,000,000
14,000,000
12,000,000
10,000,000
Quantity Supplied per Year
12,000,000
14,000,000
16,000,000
18,000,000
20,000,000
22,000,000
a. Graph these curves and show the equilibrium price and quantity.
b. Now suppose that is becomes unfashionable to ride a bicycle, so the quantity demanded at each price
falls by 4 million bikes per year. What is the new equilibrium price and quantity? Show this solution
graphically. Explain why the quantity falls by less than 4 million bikes per year.
c. Suppose instead that several major bicycle producers go out of business, thereby reducing the quantity
supplied by 4 million bikes at every price. Find the equilibrium price and quantity, and show is graphically.
Explain why the quantity falls by less than 4 million.

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