PRICE $8 $7 $6 $5 $4 $3 $0 Price $3 $4 $5 $6 $7 100 CUPS OF COFFEE 150 QUANTITY Quantity 400 350 300 250 200 200 Label the new equilibrium E1. 250 S D 300

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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### Understanding Market Equilibrium: Coffee Example

This graph illustrates the supply and demand curves for cups of coffee. The X-axis represents the quantity of coffee (ranging from 0 to 300 cups), while the Y-axis indicates the price (ranging from $0 to $8). 

- **Supply Curve (S):** The red line slopes upwards from left to right, indicating that as the price increases, the quantity of coffee supplied also increases.
- **Demand Curve (D):** The blue line slopes downwards, showing that as the price decreases, the quantity of coffee demanded increases.

The point where the supply and demand curves intersect represents the market equilibrium. At this point, the quantity of coffee supplied equals the quantity demanded.

### Data Table

- **Price and Quantity Table:**

  | Price | Quantity |
  |-------|----------|
  | $3    | 400      |
  | $4    | 350      |
  | $5    | 300      |
  | $6    | 250      |
  | $7    | 200      |

The table provides information on the quantity of coffee related to different price levels. For example, at a price of $3, 400 cups are demanded, whereas at $7, only 200 cups are provided.

### Instruction

"Label the new equilibrium E1."

This suggests marking the graph where new market conditions establish a different equilibrium point, denoted as E1.
Transcribed Image Text:### Understanding Market Equilibrium: Coffee Example This graph illustrates the supply and demand curves for cups of coffee. The X-axis represents the quantity of coffee (ranging from 0 to 300 cups), while the Y-axis indicates the price (ranging from $0 to $8). - **Supply Curve (S):** The red line slopes upwards from left to right, indicating that as the price increases, the quantity of coffee supplied also increases. - **Demand Curve (D):** The blue line slopes downwards, showing that as the price decreases, the quantity of coffee demanded increases. The point where the supply and demand curves intersect represents the market equilibrium. At this point, the quantity of coffee supplied equals the quantity demanded. ### Data Table - **Price and Quantity Table:** | Price | Quantity | |-------|----------| | $3 | 400 | | $4 | 350 | | $5 | 300 | | $6 | 250 | | $7 | 200 | The table provides information on the quantity of coffee related to different price levels. For example, at a price of $3, 400 cups are demanded, whereas at $7, only 200 cups are provided. ### Instruction "Label the new equilibrium E1." This suggests marking the graph where new market conditions establish a different equilibrium point, denoted as E1.
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