a) Suppose that the quantity demanded rises by 40 million packs of gum per month at each price. b) Draw the initial demand and supply curves as given by the table above. Call this graph Graph 1. Label this demand curve D1, and this supply curve S1. Draw the new demand curve given by this change, labeling it D2. Show the new equilibrium price and output, labeling this point A. c) Suppose that the quantity supplied rises by 50 million packs per month at each price, while the quantities demanded retain their D1 values. On a new graph (labeled as Graph 2), draw D1, S1, and the new supply curve, S2. Show the new equilibrium output and price, labeling this point C.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Q2: The following problems are based on the demand and supply schedule for gum listed
below. All quantities are in millions of packs of gum per month.
Price
|Quantity Demanded
|Quantity Supplied
$0.20
180
30
$030
160
60
$0.40
140
90
$0.50
120
120
$0.60
100
140
$0.70
80
160
$0.80
60
180
a) Suppose that the quantity demanded rises by 40 million packs of gum per month at each
price.
b) Draw the initial demand and supply curves as given by the table above. Call this graph
Graph 1. Label this demand curve D1, and this supply curve S1. Draw the new demand
curve given by this change, labeling it D2. Show the new equilibrium price and output,
labeling this point A.
c) Suppose that the quantity supplied rises by 50 million packs per month at each price, while
the quantities demanded retain their D1 values. On a new graph (labeled as Graph 2), draw
D1, S1, and the new supply curve, S2. Show the new equilibrium output and price, labeling
this point C.
Transcribed Image Text:5:26 1 Blackboard EDIT Q2: The following problems are based on the demand and supply schedule for gum listed below. All quantities are in millions of packs of gum per month. Price |Quantity Demanded |Quantity Supplied $0.20 180 30 $030 160 60 $0.40 140 90 $0.50 120 120 $0.60 100 140 $0.70 80 160 $0.80 60 180 a) Suppose that the quantity demanded rises by 40 million packs of gum per month at each price. b) Draw the initial demand and supply curves as given by the table above. Call this graph Graph 1. Label this demand curve D1, and this supply curve S1. Draw the new demand curve given by this change, labeling it D2. Show the new equilibrium price and output, labeling this point A. c) Suppose that the quantity supplied rises by 50 million packs per month at each price, while the quantities demanded retain their D1 values. On a new graph (labeled as Graph 2), draw D1, S1, and the new supply curve, S2. Show the new equilibrium output and price, labeling this point C.
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