Problem 6. If the virus in Problem 5 hits just as the new dip in Problem 4 comes onto the market, howdo the equilibrium price and equilibrium quantity of chips change? Problem 3. The demand and supply schedules for potato chips areQuantityDemanded(millions of bags per week)QuantitySuppliedPrice(cents per bag)5016013060150140701401508013016090120170100110180a. Draw a graph of the potato chip market and mark in the equilibrium price and quantity.b. If the price is 60¢ a bag, is there a shortage or a surplus, and how does the price adjust?Problem 4. In Problem 3, a new dip increases the quantity of potato chips that people want to buy by30 million bags per week at each price.a. Does the demand for chips change? Does the supply of chips change? Describe the change.b. How do the equilibrium price and equilibrium quantity of chips change?Problem 5. In Problem 3, if a virus destroys potato crops and the quantity of potato chips produceddecreases by 40 million bags a week at each price, how does the supply of chips change?

Answered: Problem 3. The demand and supply…

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

Problem 6. If the virus in Problem 5 hits just as the new dip in Problem 4 comes onto the market, how
do the equilibrium price and equilibrium quantity of chips change?

Problem 3. The demand and supply schedules for potato chips are
Quantity
Demanded
(millions of bags per week)
Quantity
Supplied
Price
(cents per bag)
50
160
130
60
150
140
70
140
150
80
130
160
90
120
170
100
110
180
a. Draw a graph of the potato chip market and mark in the equilibrium price and quantity.
b. If the price is 60¢ a bag, is there a shortage or a surplus, and how does the price adjust?
Problem 4. In Problem 3, a new dip increases the quantity of potato chips that people want to buy by
30 million bags per week at each price.
a. Does the demand for chips change? Does the supply of chips change? Describe the change.
b. How do the equilibrium price and equilibrium quantity of chips change?
Problem 5. In Problem 3, if a virus destroys potato crops and the quantity of potato chips produced
decreases by 40 million bags a week at each price, how does the supply of chips change?

Expert Solution

Introduction

The concept of supply refers to the quantity of a product, item, commodity, or service that a provider is willing to offer at a certain price. Demand refers to the amount of a product, item, commodity, or service that consumers are willing and able to purchase at a given price.

To put it another way, supply refers to how much a product or service manufacturers are willing to make and sell given the restricted resources available. Demand, on the other hand, is the quantity of a product or service that customers desire from the market.

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