Chapter 1.3, Problem 6E

Reminder Round all answers to two decimal places unless otherwise indicated.

Equilibrium Price This is a continuation of Exorcise 5. The equilibrium price is the price where the supply and demand are the same. In Figure 1.31, the supply curve is in red and the demand curve is in blue. Use this graph to estimate the equilibrium price. How many items are supplied at the equilibrium price?

FIGURE $1.31$

5. Supply and Demand Curves A supply curve is a graph that shows the quantity of a product that is made available by suppliers as a function of the price. Similarly, a demand curve is a graph that shows the quantity of a product that consumers are willing to purchase as a function of the price. Examples of supply and demand curves are shown in Figures $1.29$ and $1.30$.

a. Explain in practical terms what the supply curve in Figure $1.29$ tells us.

b. Explain in practical terms what the demand curve in Figure 1.30 tells us.

FIGURE $1.29$ A Supply curve

FIGURE $1.30$ A demand curve