The market price is $________ per bottle. 2. The equilibrium quantity is ________ bottles. 3. The price at which suppliers will not put any bottles on the market is $_______.
The market price is $________ per bottle. 2. The equilibrium quantity is ________ bottles. 3. The price at which suppliers will not put any bottles on the market is $_______.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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1. The market
2. The
3. The price at which suppliers will not put any bottles on the market is $_______.
4. What is the
5. What is the
Transcribed Image Text:### Wine Market Analysis
The graph presented is an example of a supply and demand model for the wine market. It visually represents the interaction between the supply curve (S1) and the demand curve (D) for bottles of wine. Here's a detailed analysis and an explanation of the components of the graph:
#### Axes
- The **vertical axis (P)** measures the price of wine per bottle, ranging from $0 to $40. The prices increase in increments of $2.
- The **horizontal axis (Q)** measures the quantity of wine bottles, ranging from 0 to 600 bottles in increments of 50.
#### Curves
- **Supply Curve (S1):**
- The supply curve (S1) starts at the bottom-left and slopes upwards to the top-right, representing the law of supply. As the price (P) increases, the quantity supplied (Q) also increases.
- For example, at a price of $6 per bottle, the quantity supplied is approximately 50 bottles.
- **Demand Curve (D):**
- The demand curve (D) starts at the top-left and slopes downwards to the bottom-right, illustrating the law of demand. As the price (P) decreases, the quantity demanded (Q) increases.
- For instance, at a price of $40 per bottle, the quantity demanded is approximately 50 bottles.
#### Intersection
- The point where the demand and supply curves intersect is termed as the **equilibrium point (B)**.
- **Equilibrium Price (P):** At point B, the equilibrium price is $20 per bottle.
- **Equilibrium Quantity (Q):** The equilibrium quantity at this price is 250 bottles.
#### Key Points
- **Point A:** This point represents a scenario where the price is low ($2 per bottle) and the quantity supplied is low (approximately 20 bottles).
- **Point B (Equilibrium):** The market-clearing price and quantity, where supply equals demand.
This model is essential for understanding how prices and quantities are determined in a competitive market. Adjustments in supply and demand curves can influence the equilibrium, which in turn affects market prices and quantities.
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