EBK INTERMEDIATE MICROECONOMICS AND ITS
EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
Question
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Chapter 1, Problem 1.1P

(a)

To determine

Graphical representation of supply and demand curves.

(a)

Expert Solution
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Explanation of Solution

The figure (1) below represents the graphical representation of given demand and supply curves. Here, X- axis measures the quantity (Q) and Y-axis measures price (P).

The downward sloping curve is demand curve (DD) and the upward sloping curve is supply curve (SS).

  EBK INTERMEDIATE MICROECONOMICS AND ITS, Chapter 1, Problem 1.1P

(b)

To determine

Algebraic equation of supply and demand curves.

(b)

Expert Solution
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Explanation of Solution

As shown in figure (1) above, the given points lie along two straight lines.

Use following point slope formula to calculate algebraic equation:

  P P1=(P2 P1Q2 Q1)(Q Q1)(1)

To calculate algebraic equation of demand curve, plug (700,1) and (600,2) in (1).

  P 1=( 2 1 600700)(Q 700)P 1=(1 100)(Q700)100100P = Q 700Q=800100P

To calculate algebraic equation of supply curve, plug (100,1) and (300,2) in (1).

  P 1=( 2 1 300- 100)(Q 100)P 1=(1 200)(Q100)200P200 = Q 100Q=100 +200P

Thus, equations of demand (QD) and supply (QS) curves are as follows:

  QD=800100P

  Qs=100 +200P

(c)

To determine

Excess demand of the good if the market price is zero.

(c)

Expert Solution
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Explanation of Solution

Excess demand refers to a situation where market demand is more than market supply at the given market price. It can be calculated by subtracting market demand from market supply.

  Excessdemand=QDQS=800 100P(100 +200P)=800100(0)(100+200(0))( given P=0)=800(100)=900

(d)

To determine

Excess supply of the good if the market price is $6/gallon.

(d)

Expert Solution
Check Mark

Explanation of Solution

Excess supply refers to a situation where market supply is more than market demand at the given market price. It can be calculated by subtracting market supply from market demand.

  Excesssupply=QSQD=-100 +200P(800100P)=-100 +200(6) (800100(6))( given P = $6/gallon)=1100200=900

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