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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.  At the market price in part a, the net gain to consumers when 10,000 units are purchased is $__________.

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.  At the market price in part a, the net gain to consumers when 10,000 units are purchased is $__________.

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.

 At the market price in part a, the net gain to consumers when 10,000 units are purchased is $__________.

 At the market price in part a, the net gain to producers when they supply 10,000 units is $__________

### Understanding Market Equilibrium #### Graph Description The graph illustrates the market equilibrium within the framework of supply and demand. It features two main intersecting lines: the supply curve (labelled as 'S') and the demand curve (labelled as 'D'). #### Axes - **Vertical axis (P)**: Represents the price of goods and services in dollars, ranging from $0 to $60. - **Horizontal axis (Q_d, Q_s)**: Denotes the quantity demanded and supplied, ranging from 0 to 60,000 units. #### Key Points 1. **Intersection Point**: The supply and demand curves intersect at a point indicating the market equilibrium. At this point: - The equilibrium price is $40. - The equilibrium quantity is 25,000 units. 2. **Surplus**: Occurs when the price is above the equilibrium price. For example, at a price of $50: - The quantity supplied is greater than the quantity demanded. - There is an excess supply of 15,000 units (40,000 units supplied vs. 25,000 units demanded). 3. **Shortage**: Occurs when the price is below the equilibrium price. For instance, at a price of $30: - The quantity demanded exceeds the quantity supplied. - There is an excess demand of 15,000 units (25,000 units supplied vs. 40,000 units demanded). #### Analyzing the Graph - **Supply Curve (S)**: Slopes upward, indicating that as the price increases, the quantity supplied also increases. - **Demand Curve (D)**: Slopes downward, suggesting that as the price decreases, the quantity demanded increases. By understanding these curves and their intersection, we can gain insights into how prices are determined in a market economy and the dynamics of supply and demand.
Transcribed Image Text:### Understanding Market Equilibrium #### Graph Description The graph illustrates the market equilibrium within the framework of supply and demand. It features two main intersecting lines: the supply curve (labelled as 'S') and the demand curve (labelled as 'D'). #### Axes - **Vertical axis (P)**: Represents the price of goods and services in dollars, ranging from $0 to $60. - **Horizontal axis (Q_d, Q_s)**: Denotes the quantity demanded and supplied, ranging from 0 to 60,000 units. #### Key Points 1. **Intersection Point**: The supply and demand curves intersect at a point indicating the market equilibrium. At this point: - The equilibrium price is $40. - The equilibrium quantity is 25,000 units. 2. **Surplus**: Occurs when the price is above the equilibrium price. For example, at a price of $50: - The quantity supplied is greater than the quantity demanded. - There is an excess supply of 15,000 units (40,000 units supplied vs. 25,000 units demanded). 3. **Shortage**: Occurs when the price is below the equilibrium price. For instance, at a price of $30: - The quantity demanded exceeds the quantity supplied. - There is an excess demand of 15,000 units (25,000 units supplied vs. 40,000 units demanded). #### Analyzing the Graph - **Supply Curve (S)**: Slopes upward, indicating that as the price increases, the quantity supplied also increases. - **Demand Curve (D)**: Slopes downward, suggesting that as the price decreases, the quantity demanded increases. By understanding these curves and their intersection, we can gain insights into how prices are determined in a market economy and the dynamics of supply and demand.
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