Answered: Consider the supply and demand curves…

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

Consider the supply and demand curves for taxi rides in the attached graph. At the equilibrium quantity of_____ Consumers marginal willingness to pay is______and the marginal cost of taxi rides is______per mile.

Price ($ per mile)
3.50
2.50
1.30 1.83
240
-
+
C
B (D A
400
600
Quantity of taxi rides (millions of miles)
S
840
X
AIE

Expert Solution

Step 1

Equilibrium is a state where demand and supply is equal.

Equilibrium explains the stable situation where both consumers as well as producer or suppliers both are satisfied.

Equilibrium quantity is the quantity which is corresponding to the equilibrium point and similarly equilibrium price is the price which is corresponding to the equilibrium point.

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