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Use the linear demand and supply curves shown below to answer the following questions.You must show all calculations step-by-step or no credit will be given.  The net gain to society when 10,000 units are produced and consumed

Use the linear demand and supply curves shown below to answer the following questions.You must show all calculations step-by-step or no credit will be given.  The net gain to society when 10,000 units are produced and consumed

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Use the linear demand and supply curves shown below to answer the following questions.You must show all calculations step-by-step or no credit will be given.

 The net gain to society when 10,000 units are produced and consumed at the market price is $__________, which is called __________.

The net gain to society created by this market is $__________.

**Understanding Supply and Demand: A Graphical Representation** This graph represents the basic economic concepts of supply and demand where the x-axis corresponds to the quantity demanded and supplied, and the y-axis corresponds to the price in dollars. ### Graph Explanation: 1. **Axes**: - The horizontal axis (x-axis) shows the Quantity demanded and supplied, which ranges from 0 to 60,000 units. - The vertical axis (y-axis) shows the Price in dollars, which ranges from $0 to $60. 2. **Lines**: - The blue line labeled **D** represents the demand curve. It slopes downward from left to right, which illustrates the inverse relationship between price and quantity demanded. As the price decreases, the quantity demanded increases. - The blue line labeled **S** represents the supply curve. It slopes upward from left to right, which illustrates the direct relationship between price and quantity supplied. As the price increases, the quantity supplied increases. 3. **Equilibrium**: - The point where the supply curve (S) and demand curve (D) intersect is called the equilibrium point. At this point, the quantity demanded equals the quantity supplied. - In this graph, the equilibrium price is $40, and the equilibrium quantity is 30,000 units. This is where the market is in balance, and there are no surplus or shortage of goods. 4. **Dotted Lines and Points**: - The dotted lines parallel to the y-axis connect different quantities to their respective points on the demand and supply curves to help illustrate variations in price and quantity: - At a price of $50, the quantity supplied is 37,500 units and the quantity demanded is 22,500 units. - At a price of $42.50, an intermediate point shows the relationship between the quantity of 33,750 units. - At a price of $37.50, an intermediate point shows a relationship, offering insight into how quantity demanded and supplied balance or differ. This graphical representation helps understand how price adjustments can restore balance in a market, illustrating the foundational principle of supply and demand.
Transcribed Image Text:**Understanding Supply and Demand: A Graphical Representation** This graph represents the basic economic concepts of supply and demand where the x-axis corresponds to the quantity demanded and supplied, and the y-axis corresponds to the price in dollars. ### Graph Explanation: 1. **Axes**: - The horizontal axis (x-axis) shows the Quantity demanded and supplied, which ranges from 0 to 60,000 units. - The vertical axis (y-axis) shows the Price in dollars, which ranges from $0 to $60. 2. **Lines**: - The blue line labeled **D** represents the demand curve. It slopes downward from left to right, which illustrates the inverse relationship between price and quantity demanded. As the price decreases, the quantity demanded increases. - The blue line labeled **S** represents the supply curve. It slopes upward from left to right, which illustrates the direct relationship between price and quantity supplied. As the price increases, the quantity supplied increases. 3. **Equilibrium**: - The point where the supply curve (S) and demand curve (D) intersect is called the equilibrium point. At this point, the quantity demanded equals the quantity supplied. - In this graph, the equilibrium price is $40, and the equilibrium quantity is 30,000 units. This is where the market is in balance, and there are no surplus or shortage of goods. 4. **Dotted Lines and Points**: - The dotted lines parallel to the y-axis connect different quantities to their respective points on the demand and supply curves to help illustrate variations in price and quantity: - At a price of $50, the quantity supplied is 37,500 units and the quantity demanded is 22,500 units. - At a price of $42.50, an intermediate point shows the relationship between the quantity of 33,750 units. - At a price of $37.50, an intermediate point shows a relationship, offering insight into how quantity demanded and supplied balance or differ. This graphical representation helps understand how price adjustments can restore balance in a market, illustrating the foundational principle of supply and demand.
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