Imagine that you have opened a small business in yourschool selling Italian ices. You make the ices from freshfruit – lemons, oranges, blueberries and cherries - using afamily recipe that your grandfather has passed along. Youare concerned about the price you pay for the fruit, as theprice you pay for the ingredients is reflected in the priceyou charge your customers, and you are aware that there isa limit to what your customers are willing to pay. Althoughyou would like to offer variety to your customers, if theprice of any of the fruits becomes too high, you will cutback on your purchases, and offer less of that flavor to yourcustomers. The quantity of lemons you are willing topurchase at various prices per bushel is presented in thetable below.The lemon supplier obtains lemons directly from growersin Al Ain and has a variety of customers that includerestaurants, supermarkets and fruit vendors.The quantity of lemons you are willing to purchase and thequantity of lemons the supplier is willing to offer at variousprices per bushel are presented in the table below:Quantity supplied(S)Price per bushelQuantitydemanded (D).$402060$323050$244040$165030$86020 Exercise 1: For each price per bushel in the table:• Indicate whether there is a shortage (quantitydemanded > quantity supplied) or a surplus (quantitysupplied > quantity demanded)• Indicate the amount of the shortage or surplus,• Draw a graph and indicate the equilibrium on thegraph. What is the EQ price?Supply of Part Time Workers3530252015105.50010001500200025003000Quantity of Part Time HoursSupply of Part Time Workers35302520151015002000250030005001000Quantity of Part Time HoursQuantity supplied Surplus orshortageAmountQuantitydemanded-(B)Price per bushel$402060$323050$244040$165030$86020Hourly Rates

Price of Bushels Quantity Demanded Quantity Supplied Surplus or Shortage Amount 40 20 60 Surplus…

• Indicate whether there is a shortage (quantity demanded > quantity supplied) or a surplus (quantity supplied > quantity demanded) • Indicate the amount of the shortage or surplus. • Draw a graph and indicate the equilibrium on the graph. What is the EQ price?

• Indicate whether there is a shortage (quantity demanded > quantity supplied) or a surplus (quantity supplied > quantity demanded) • Indicate the amount of the shortage or surplus. • Draw a graph and indicate the equilibrium on the graph. What is the EQ price?

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

Imagine that you have opened a small business in your
school selling Italian ices. You make the ices from fresh
fruit – lemons, oranges, blueberries and cherries - using a
family recipe that your grandfather has passed along. You
are concerned about the price you pay for the fruit, as the
price you pay for the ingredients is reflected in the price
you charge your customers, and you are aware that there is
a limit to what your customers are willing to pay. Although
you would like to offer variety to your customers, if the
price of any of the fruits becomes too high, you will cut
back on your purchases, and offer less of that flavor to your
customers. The quantity of lemons you are willing to
purchase at various prices per bushel is presented in the
table below.
The lemon supplier obtains lemons directly from growers
in Al Ain and has a variety of customers that include
restaurants, supermarkets and fruit vendors.
The quantity of lemons you are willing to purchase and the
quantity of lemons the supplier is willing to offer at various
prices per bushel are presented in the table below:
Quantity supplied
(S)
Price per bushel
Quantity
demanded (D).
$40
20
60
$32
30
50
$24
40
40
$16
50
30
$8
60
20

Exercise 1: For each price per bushel in the table:
• Indicate whether there is a shortage (quantity
demanded > quantity supplied) or a surplus (quantity
supplied > quantity demanded)
• Indicate the amount of the shortage or surplus,
• Draw a graph and indicate the equilibrium on the
graph. What is the EQ price?
Supply of Part Time Workers
35
30
25
20
15
10
5.
500
1000
1500
2000
2500
3000
Quantity of Part Time Hours
Supply of Part Time Workers
35
30
25
20
15
10
1500
2000
2500
3000
500
1000
Quantity of Part Time Hours
Quantity supplied Surplus or
shortage
Amount
Quantity
demanded-(B)
Price per bushel
$40
20
60
$32
30
50
$24
40
40
$16
50
30
$8
60
20
Hourly Rates

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