Chapter 1, Problem 1.2P

A

To determine

To describe:Based on the given data and information, prove that the P=3 is the equilibrium price in the market of orange juice.

Answer to Problem 1.2P

If there is a rise in the demand for a dashboard GPS which follows the prices of automobiles can result in complement decrease.

Explanation of Solution

Price	Quantity Supplied	Quantity Demanded
1	100	700
2	300	600
3	500	500
4	700	400
5	900	300

By observing the above table, it can be seen that at a market price of 3, the quantity supplied equals to the quantity demanded. Hence, the equilibrium price is 3.

Economics Concept Introduction

Introduction: The price at which the quantity of goods supplied is equal to the quantity of goods supplied is referred to as the market price.

B

To determine

To describe:

Based on the given and arrived at data, find out the reasons behind the prices 2 and 4 not being equilibrium prices.

Answer to Problem 1.2P

If there is a fall in the demand for the e-book as it is following the change in the prices of e-books it would result in an increase of complement.

Explanation of Solution

Price	Quantity Supplied	Quantity Demanded
1	100	700
2	300	600
3	500	500
4	700	400
5	900	300

By observing the above table, at a price of 2 the quantity supplied is lower than the quantity demanded, and hence it is not the equilibrium price.

Similarly, at the price of 4, the quantity demanded is more than the quantity supplied, and hence it is not the equilibrium price.

Economics Concept Introduction

Introduction: The price at which the quantity of goods supplied is equal to the quantity of goods supplied is referred to as the market price.

C

To determine

To describe:

Graph the results of previous parts and show that the equilibrium price is achieved.

Answer to Problem 1.2P

If there is a rise in the demand for tablet devices which can eventually be following a change in the price of ultrathin laptop computers, that also happen to be the substitutes can result in increase in pricing.

Explanation of Solution

Upon observing the graph, as usual, it can be noticed that the supply curve and demand curve are intersecting at a price level of 3.

  

Hence, it can be concluded that the equilibrium price is 3.

Economics Concept Introduction

Introduction: The price at which the quantity of goods supplied is equal to the quantity of goods supplied is referred to as the market price.

D

To determine

To describe:

Supposing the given assumption, possibility of the change in the data given in earlier problem.

Answer to Problem 1.2P

If there is also a fall in the demand for physical books it can result in following a change in the price of e-books which are also substitutes can result in the decrease of the prices.

Explanation of Solution

Provided that the people now are demanding 300 more quantity at every price change, the demand will be changed and can be observed in the given table:

Price	Quantity Supplied	Quantity Demanded
1	100	1000
2	300	900
3	500	800
4	700	700
5	900	600

In the resulting graph as shown below, the change in the quantity demanded would shift the demand curve outward:

  

Economics Concept Introduction

Introduction: The price at which the quantity of goods supplied is equal to the quantity of goods supplied is referred to as the equilibrium price.

E

To determine

To describe:

Given the proposed change in the demand, outline the result in the graph.

Answer to Problem 1.2P

If there is also a fall in the demand for physical books it can result in following a change in the price of e-books which are also substitutes can result in the decrease of the prices.

Explanation of Solution

  

The proposed increase in the demand would change the equilibrium to new equilibrium represented by E1, for the new equilibrium price of P=4.

Economics Concept Introduction

Introduction: The price at which the quantity of goods supplied is equal to the quantity of goods supplied is referred to as the equilibrium price.

F

To determine

To describe:

Find out the change in pattern for the given supply demanded.

Answer to Problem 1.2P

If there is also a fall in the demand for physical books it can result in following a change in the price of e-books which are also substitutes can result in the decrease of the prices.

Explanation of Solution

With the given new supply demanded at every price, observe the given table for the resulting changes:

Price	Quantity Supplied	Quantity Demanded
1	0	700
2	0	600
3	200	500
4	400	400
5	600	300

Such a change in the supply pattern would shift the supply curve to the inward.

Economics Concept Introduction

Introduction: The price at which the quantity of goods supplied is equal to the quantity of goods supplied is referred to as the equilibrium price.

G

To determine

To describe:

Find out the equilibrium price in the market with the new supply relationship together with the demand relationship.

Answer to Problem 1.2P

If there is also a fall in the demand for physical books it can result in following a change in the price of e-books which are also substitutes can result in the decrease of the prices.

Explanation of Solution

With the given new supply demanded at every price, observe the given table for the resulting changes:

Price	Quantity Supplied	Quantity Demanded
1	0	700
2	0	600
3	200	500
4	400	400
5	600	300

The new equilibrium price would be P=4, at the given quantity supplied and the quantity demanded.

Economics Concept Introduction

Introduction: The price at which the quantity of goods supplied is equal to the quantity of goods supplied is referred to as the equilibrium price.

H

To determine

To describe:

With the new demand and supply quantity relationships, observe the change in equilibrium price.

Answer to Problem 1.2P

If there is also a fall in the demand for physical books it can result in following a change in the price of e-books which are also substitutes can result in the decrease of the prices.

Explanation of Solution

With the reduce in the supply and excess of demand at P=3, the result is that it is no more an equilibrium price.

This because, the supply and demand are not any more the same for the given price, and hence, the price is not any more an equilibrium price.

Economics Concept Introduction

Introduction: The price at which the quantity of goods supplied is equal to the quantity of goods supplied is referred to as the equilibrium price.

I

To determine

To describe:

For the observed results at the supply shift, put out a graph.

Answer to Problem 1.2P

If there is also a fall in the demand for physical books it can result in following a change in the price of e-books which are also substitutes can result in the decrease of the prices.

Explanation of Solution

  

Economics Concept Introduction

Introduction: The price at which the quantity of goods supplied is equal to the quantity of goods supplied is referred to as the equilibrium price.