Macroeconomics – Week #2 AssignmentDemand and Supply ExercisesDirections: Fill in the boxes (QD, QS, D, S, P, Q) in the next three demand and supply exercises. Based upon the event, what can we expect to occur for the market? Use a “0” (zero) if nothing will occur for that particular variable, a “+” (plus) if an increase, or a “-“ (negative) if a reduction. QD stands for Quantity Demanded, QS for Quantity Supplied, D for Demand, S for Supply, P for Price, and Q for Quantity. ### Problem 1**Market:** Automobile Windshields**Event:** Toyota, GM, and Ford plan to increase production due to higher demand expectations.**Graph Explanation:** The graph represents a supply and demand model for automobile windshields. The demand curve (D) slopes downwards from left to right, indicating that as the price decreases, the quantity demanded increases. The supply curve (S) slopes upwards from left to right, indicating that as the price increases, the quantity supplied also increases. The intersection point of the supply and demand curves represents the equilibrium price and quantity.Below the graph, there's a table with labeled sections: QD, QS, D, S, P, Q. These likely stand for:- QD: Quantity Demanded- QS: Quantity Supplied- D: Demand- S: Supply- P: Price- Q: Quantity### Problem 2**Market:** Gasoline**Event:** One of the major refineries in the Gulf of the U.S. is shut down for repairs due to a fire.**Graph Explanation:** Similar to Problem 1, this graph also depicts a supply and demand model, but for gasoline. The demand curve (D) slopes downwards, indicating a decrease in quantity demanded as prices rise. The supply curve (S) slopes upwards, indicating an increase in quantity supplied as prices go up. The intersection of the two curves marks the equilibrium price and quantity.Below this graph, there is also a table labeled with the same sections as in Problem 1: QD, QS, D, S, P, Q.### SummaryThese problems illustrate how changes in market events affect the supply and demand for particular goods. In Problem 1, an expected increase in demand leads to higher production, likely shifting the supply curve to the right. In Problem 2, the supply shock due to the refinery fire would likely shift the supply curve to the left, causing potential changes in the equilibrium price and quantity for gasoline. ### Problem 3: Rental Units in New York City#### Government Price Ceiling on Rental Units for Low-Income Housing**Graph Explanation:**The graph above illustrates the basic economic model of supply and demand specifically for rental units in New York City. - The vertical axis represents the price of rental units.- The horizontal axis represents the quantity of rental units.The supply curve (S) slopes upward from left to right, indicating that as the price increases, the quantity supplied also increases. Conversely, the demand curve (D) slopes downward from left to right, indicating that as the price decreases, the quantity demanded increases.The intersection point of these two lines is known as the equilibrium point, where the supply and demand for rental units are balanced.**Table Explanation:**Below the graph, there is a table with the following columns:- **QD:** Quantity Demanded- **QS:** Quantity Supplied- **D:** Demand- **S:** Supply- **P:** Price- **Q:** QuantityThis table is designed to help analyze how the equilibrium price (P) and quantity (Q) change when there is a government-imposed price ceiling. **Concept Overview:**When the government imposes a price ceiling on rental units to make low-income housing more affordable, it sets a maximum price that can be charged for rental units. If this price ceiling is below the equilibrium price, it can lead to a shortage of rental units. The quantity demanded will exceed the quantity supplied at that lower price, causing more people to seek rental units than there are units available.This model and its accompanying graphical and tabular data are critical for understanding the impacts of government intervention in housing markets, specifically in large cities like New York City.© 2018 Grantham University

Demand curve represents inverse relationship between prices and the quantity demanded in a market .…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Demand and Supply Exercises

Directions: Fill in the boxes (QD, QS, D, S, P, Q) in the next three demand and supply exercises. Based upon the event, what can we expect to occur for the market? Use a “0” (zero) if nothing will occur for that particular variable, a “+” (plus) if an increase, or a “-“ (negative) if a reduction. QD stands for Quantity Demanded, QS for Quantity Supplied, D for Demand, S for Supply, P for Price, and Q for Quantity.

### Problem 1

**Market:** Automobile Windshields

**Event:** Toyota, GM, and Ford plan to increase production due to higher demand expectations.

**Graph Explanation:** The graph represents a supply and demand model for automobile windshields. The demand curve (D) slopes downwards from left to right, indicating that as the price decreases, the quantity demanded increases. The supply curve (S) slopes upwards from left to right, indicating that as the price increases, the quantity supplied also increases. The intersection point of the supply and demand curves represents the equilibrium price and quantity.

Below the graph, there's a table with labeled sections: QD, QS, D, S, P, Q. These likely stand for:
- QD: Quantity Demanded
- QS: Quantity Supplied
- D: Demand
- S: Supply
- P: Price
- Q: Quantity

### Problem 2

**Market:** Gasoline

**Event:** One of the major refineries in the Gulf of the U.S. is shut down for repairs due to a fire.

**Graph Explanation:** Similar to Problem 1, this graph also depicts a supply and demand model, but for gasoline. The demand curve (D) slopes downwards, indicating a decrease in quantity demanded as prices rise. The supply curve (S) slopes upwards, indicating an increase in quantity supplied as prices go up. The intersection of the two curves marks the equilibrium price and quantity.

Below this graph, there is also a table labeled with the same sections as in Problem 1: QD, QS, D, S, P, Q.

### Summary
These problems illustrate how changes in market events affect the supply and demand for particular goods. In Problem 1, an expected increase in demand leads to higher production, likely shifting the supply curve to the right. In Problem 2, the supply shock due to the refinery fire would likely shift the supply curve to the left, causing potential changes in the equilibrium price and quantity for gasoline.

### Problem 3: Rental Units in New York City

#### Government Price Ceiling on Rental Units for Low-Income Housing

**Graph Explanation:**
The graph above illustrates the basic economic model of supply and demand specifically for rental units in New York City.

- The vertical axis represents the price of rental units.
- The horizontal axis represents the quantity of rental units.

The supply curve (S) slopes upward from left to right, indicating that as the price increases, the quantity supplied also increases. Conversely, the demand curve (D) slopes downward from left to right, indicating that as the price decreases, the quantity demanded increases.

The intersection point of these two lines is known as the equilibrium point, where the supply and demand for rental units are balanced.

**Table Explanation:**
Below the graph, there is a table with the following columns:

- **QD:** Quantity Demanded
- **QS:** Quantity Supplied
- **D:** Demand
- **S:** Supply
- **P:** Price
- **Q:** Quantity

This table is designed to help analyze how the equilibrium price (P) and quantity (Q) change when there is a government-imposed price ceiling.

**Concept Overview:**
When the government imposes a price ceiling on rental units to make low-income housing more affordable, it sets a maximum price that can be charged for rental units. If this price ceiling is below the equilibrium price, it can lead to a shortage of rental units. The quantity demanded will exceed the quantity supplied at that lower price, causing more people to seek rental units than there are units available.

This model and its accompanying graphical and tabular data are critical for understanding the impacts of government intervention in housing markets, specifically in large cities like New York City.

© 2018 Grantham University

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Problem 1 Market Event Toyota, GM. and Ford plan to increase production due to higher demand expectations Automobile windshiolds Price D. Quantity QD Qs D. Problem 2 Gasoline One of the major refineries in the Price Gulf in the US is shut down for repairs due to fire D Quantity QS

Demand and Supply Exercises