1. 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 $_______.4. What is the consumers’ surplus in the market at equilibrium $________ (assume the demand curve starts at $38)5. What is the producers’ surplus in this market at equilibrium $_______ ### Wine Market AnalysisThe 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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Answered: The market price is $________ per…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. 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 $_______.
4. What is the consumers’ surplus in the market at equilibrium $________ (assume the demand curve starts at $38)
5. What is the producers’ surplus in this market at equilibrium $_______

### 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.

Definition Video Formula Definition Phenomenon in which market supply and demand balance each other. Market equilibrium is the economic state in which the market demand curve intersects the market supply curve, giving us the equilibrium price and equilibrium quantity for which a commodity can be sold and purchased in an economy. When market equilibrium is achieved, it suggests that all resources have been allocated efficiently and that there is just a distribution of income and resources in the economy. Video Formula

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