The equilibrium demand and supply of milk.

Question

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Answer 1

Question

Chapter 4, Problem 1SQP

(a):

To determine

The equilibrium demand and supply of milk.

(a):

Expert Solution

Explanation of Solution

The equilibrium demand and supply of milk in the economy can be obtained at the point of intersection of the market demand and supply curves in the economy. The market demand and supply schedules are given, and a graph can be plotted on the basis of the schedule as follows:

Price per gallon	Quantity demanded (millions of gallons)	Quantity supplied (millions of gallons)
$10.00	100	500
8.00	200	400
6.00	300	300
4.00	400	200
2.00	500	100

Based on this table, it is identified that the quantity supplied increases as price increases and there is a direct and positive relation between the price and quantity supplied. On the other hand, there is a negative relation between the quantity demanded and price because the quantity demanded decreases as price increases. Thus, the quantity demanded will be indicated by a downward sloping curve, whereas the quantity supplied will be indicated by an upward sloping curve as follows:

Economics For Today, Chapter 4, Problem 1SQP

From the diagram, it is observed that the market demand for milk and the supply of milk intersect at Point E. The corresponding quantity at Point E will be the equilibrium quantity of milk, and the corresponding price at Point E will be the equilibrium price of the milk. Thus, at the point of equilibrium E, the equilibrium price is $6 per gallon and the quantity is 300 gallons per month.

Economics Concept Introduction

Equilibrium: Equilibrium in the market is obtained at the point where the market demand is equal to the market supply, and there is no excess demand or supply present in the economy.

(b):

To determine

The effect of support price of $8 per gallon of milk.

(b):

Expert Solution

Explanation of Solution

From the diagram, it is observed that the market demand for milk and the supply of milk intersect at Point E. The corresponding quantity Point E will be the equilibrium quantity of milk and the corresponding price Point E will be the equilibrium price of the milk. Thus, at the point of equilibrium E, the equilibrium price is $6 per gallon and the quantity is 300 gallons per month.

However, when the government enacts the support price of $8 per gallon, the market price will be $8 per gallon. The quantity demanded at this price is 200 gallons per month, whereas the quantity supplied is 400 gallons per month. This means that there will be a surplus of 200 gallons of milk in the economy. The government has to purchase this excess surplus from the market. Since the government revenue is the tax revenue, the non–milk-drinking taxpayers have to pay for the milk indirectly.

(c):

To determine

The effect of ceiling price of $4 per gallon of milk.

(c):

Expert Solution

Explanation of Solution

When the government enacts the ceiling price of $4 per gallon, the market price will be $4 per gallon. The quantity demanded at this price is 400 gallons per month, whereas the quantity supplied is 200 gallons per month. This means that there will be a shortage of 200 gallons of milk in the economy. The government has to ration the milk in order to prevent the black marketing of milk. This is caused due to the action of the government to keep the price of milk below the equilibrium level of $6 per gallon.

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Use the following table to work Problems 5 to 9. Minnie's Mineral Springs, a single-price monopoly, faces the market demand schedule: Price Quantity demanded (dollars per bottle) 10 8 (bottles per hour) 0 1 6 2 4 3 2 4 0 5 5. a. Calculate Minnie's total revenue schedule. b. Calculate its marginal revenue schedule. 6. a. Draw a graph of the market demand curve and Minnie's marginal revenue curve. b. Why is Minnie's marginal revenue less than the price? 7. a. At what price is Minnie's total revenue maxi- mized? b. Over what range of prices is the demand for water from Minnie's Mineral Springs elastic? 8. Why will Minnie not produce a quantity at which the market demand for water is inelastic?

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Answer 2

Question

Chapter 4, Problem 1SQP

(a):

To determine

The equilibrium demand and supply of milk.

(a):

Expert Solution

Explanation of Solution

The equilibrium demand and supply of milk in the economy can be obtained at the point of intersection of the market demand and supply curves in the economy. The market demand and supply schedules are given, and a graph can be plotted on the basis of the schedule as follows:

Price per gallon	Quantity demanded (millions of gallons)	Quantity supplied (millions of gallons)
$10.00	100	500
8.00	200	400
6.00	300	300
4.00	400	200
2.00	500	100

Based on this table, it is identified that the quantity supplied increases as price increases and there is a direct and positive relation between the price and quantity supplied. On the other hand, there is a negative relation between the quantity demanded and price because the quantity demanded decreases as price increases. Thus, the quantity demanded will be indicated by a downward sloping curve, whereas the quantity supplied will be indicated by an upward sloping curve as follows:

Economics For Today, Chapter 4, Problem 1SQP

From the diagram, it is observed that the market demand for milk and the supply of milk intersect at Point E. The corresponding quantity at Point E will be the equilibrium quantity of milk, and the corresponding price at Point E will be the equilibrium price of the milk. Thus, at the point of equilibrium E, the equilibrium price is $6 per gallon and the quantity is 300 gallons per month.

Economics Concept Introduction

Equilibrium: Equilibrium in the market is obtained at the point where the market demand is equal to the market supply, and there is no excess demand or supply present in the economy.

(b):

To determine

The effect of support price of $8 per gallon of milk.

(b):

Expert Solution

Explanation of Solution

From the diagram, it is observed that the market demand for milk and the supply of milk intersect at Point E. The corresponding quantity Point E will be the equilibrium quantity of milk and the corresponding price Point E will be the equilibrium price of the milk. Thus, at the point of equilibrium E, the equilibrium price is $6 per gallon and the quantity is 300 gallons per month.

However, when the government enacts the support price of $8 per gallon, the market price will be $8 per gallon. The quantity demanded at this price is 200 gallons per month, whereas the quantity supplied is 400 gallons per month. This means that there will be a surplus of 200 gallons of milk in the economy. The government has to purchase this excess surplus from the market. Since the government revenue is the tax revenue, the non–milk-drinking taxpayers have to pay for the milk indirectly.

(c):

To determine

The effect of ceiling price of $4 per gallon of milk.

(c):

Expert Solution

Explanation of Solution

When the government enacts the ceiling price of $4 per gallon, the market price will be $4 per gallon. The quantity demanded at this price is 400 gallons per month, whereas the quantity supplied is 200 gallons per month. This means that there will be a shortage of 200 gallons of milk in the economy. The government has to ration the milk in order to prevent the black marketing of milk. This is caused due to the action of the government to keep the price of milk below the equilibrium level of $6 per gallon.

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Answer 3

Question

Chapter 4, Problem 1SQP

(a):

To determine

The equilibrium demand and supply of milk.

(a):

Expert Solution

Explanation of Solution

The equilibrium demand and supply of milk in the economy can be obtained at the point of intersection of the market demand and supply curves in the economy. The market demand and supply schedules are given, and a graph can be plotted on the basis of the schedule as follows:

Price per gallon	Quantity demanded (millions of gallons)	Quantity supplied (millions of gallons)
$10.00	100	500
8.00	200	400
6.00	300	300
4.00	400	200
2.00	500	100

Based on this table, it is identified that the quantity supplied increases as price increases and there is a direct and positive relation between the price and quantity supplied. On the other hand, there is a negative relation between the quantity demanded and price because the quantity demanded decreases as price increases. Thus, the quantity demanded will be indicated by a downward sloping curve, whereas the quantity supplied will be indicated by an upward sloping curve as follows:

Economics For Today, Chapter 4, Problem 1SQP

From the diagram, it is observed that the market demand for milk and the supply of milk intersect at Point E. The corresponding quantity at Point E will be the equilibrium quantity of milk, and the corresponding price at Point E will be the equilibrium price of the milk. Thus, at the point of equilibrium E, the equilibrium price is $6 per gallon and the quantity is 300 gallons per month.

Economics Concept Introduction

Equilibrium: Equilibrium in the market is obtained at the point where the market demand is equal to the market supply, and there is no excess demand or supply present in the economy.

(b):

To determine

The effect of support price of $8 per gallon of milk.

(b):

Expert Solution

Explanation of Solution

From the diagram, it is observed that the market demand for milk and the supply of milk intersect at Point E. The corresponding quantity Point E will be the equilibrium quantity of milk and the corresponding price Point E will be the equilibrium price of the milk. Thus, at the point of equilibrium E, the equilibrium price is $6 per gallon and the quantity is 300 gallons per month.

However, when the government enacts the support price of $8 per gallon, the market price will be $8 per gallon. The quantity demanded at this price is 200 gallons per month, whereas the quantity supplied is 400 gallons per month. This means that there will be a surplus of 200 gallons of milk in the economy. The government has to purchase this excess surplus from the market. Since the government revenue is the tax revenue, the non–milk-drinking taxpayers have to pay for the milk indirectly.

(c):

To determine

The effect of ceiling price of $4 per gallon of milk.

(c):

Expert Solution

Explanation of Solution

When the government enacts the ceiling price of $4 per gallon, the market price will be $4 per gallon. The quantity demanded at this price is 400 gallons per month, whereas the quantity supplied is 200 gallons per month. This means that there will be a shortage of 200 gallons of milk in the economy. The government has to ration the milk in order to prevent the black marketing of milk. This is caused due to the action of the government to keep the price of milk below the equilibrium level of $6 per gallon.

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Answer 4

Question

Chapter 4, Problem 1SQP

(a):

To determine

The equilibrium demand and supply of milk.

(a):

Expert Solution

Explanation of Solution

The equilibrium demand and supply of milk in the economy can be obtained at the point of intersection of the market demand and supply curves in the economy. The market demand and supply schedules are given, and a graph can be plotted on the basis of the schedule as follows:

Price per gallon	Quantity demanded (millions of gallons)	Quantity supplied (millions of gallons)
$10.00	100	500
8.00	200	400
6.00	300	300
4.00	400	200
2.00	500	100

Based on this table, it is identified that the quantity supplied increases as price increases and there is a direct and positive relation between the price and quantity supplied. On the other hand, there is a negative relation between the quantity demanded and price because the quantity demanded decreases as price increases. Thus, the quantity demanded will be indicated by a downward sloping curve, whereas the quantity supplied will be indicated by an upward sloping curve as follows:

Economics For Today, Chapter 4, Problem 1SQP

From the diagram, it is observed that the market demand for milk and the supply of milk intersect at Point E. The corresponding quantity at Point E will be the equilibrium quantity of milk, and the corresponding price at Point E will be the equilibrium price of the milk. Thus, at the point of equilibrium E, the equilibrium price is $6 per gallon and the quantity is 300 gallons per month.

Economics Concept Introduction

Equilibrium: Equilibrium in the market is obtained at the point where the market demand is equal to the market supply, and there is no excess demand or supply present in the economy.

(b):

To determine

The effect of support price of $8 per gallon of milk.

(b):

Expert Solution

Explanation of Solution

From the diagram, it is observed that the market demand for milk and the supply of milk intersect at Point E. The corresponding quantity Point E will be the equilibrium quantity of milk and the corresponding price Point E will be the equilibrium price of the milk. Thus, at the point of equilibrium E, the equilibrium price is $6 per gallon and the quantity is 300 gallons per month.

However, when the government enacts the support price of $8 per gallon, the market price will be $8 per gallon. The quantity demanded at this price is 200 gallons per month, whereas the quantity supplied is 400 gallons per month. This means that there will be a surplus of 200 gallons of milk in the economy. The government has to purchase this excess surplus from the market. Since the government revenue is the tax revenue, the non–milk-drinking taxpayers have to pay for the milk indirectly.

(c):

To determine

The effect of ceiling price of $4 per gallon of milk.

(c):

Expert Solution

Explanation of Solution

When the government enacts the ceiling price of $4 per gallon, the market price will be $4 per gallon. The quantity demanded at this price is 400 gallons per month, whereas the quantity supplied is 200 gallons per month. This means that there will be a shortage of 200 gallons of milk in the economy. The government has to ration the milk in order to prevent the black marketing of milk. This is caused due to the action of the government to keep the price of milk below the equilibrium level of $6 per gallon.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 4, Problem 1SQP

(a):

To determine

The equilibrium demand and supply of milk.

(a):

Expert Solution

Explanation of Solution

The equilibrium demand and supply of milk in the economy can be obtained at the point of intersection of the market demand and supply curves in the economy. The market demand and supply schedules are given, and a graph can be plotted on the basis of the schedule as follows:

Price per gallon	Quantity demanded (millions of gallons)	Quantity supplied (millions of gallons)
$10.00	100	500
8.00	200	400
6.00	300	300
4.00	400	200
2.00	500	100

Based on this table, it is identified that the quantity supplied increases as price increases and there is a direct and positive relation between the price and quantity supplied. On the other hand, there is a negative relation between the quantity demanded and price because the quantity demanded decreases as price increases. Thus, the quantity demanded will be indicated by a downward sloping curve, whereas the quantity supplied will be indicated by an upward sloping curve as follows:

Economics For Today, Chapter 4, Problem 1SQP

From the diagram, it is observed that the market demand for milk and the supply of milk intersect at Point E. The corresponding quantity at Point E will be the equilibrium quantity of milk, and the corresponding price at Point E will be the equilibrium price of the milk. Thus, at the point of equilibrium E, the equilibrium price is $6 per gallon and the quantity is 300 gallons per month.

Economics Concept Introduction

Equilibrium: Equilibrium in the market is obtained at the point where the market demand is equal to the market supply, and there is no excess demand or supply present in the economy.

(b):

To determine

The effect of support price of $8 per gallon of milk.

(b):

Expert Solution

Explanation of Solution

From the diagram, it is observed that the market demand for milk and the supply of milk intersect at Point E. The corresponding quantity Point E will be the equilibrium quantity of milk and the corresponding price Point E will be the equilibrium price of the milk. Thus, at the point of equilibrium E, the equilibrium price is $6 per gallon and the quantity is 300 gallons per month.

However, when the government enacts the support price of $8 per gallon, the market price will be $8 per gallon. The quantity demanded at this price is 200 gallons per month, whereas the quantity supplied is 400 gallons per month. This means that there will be a surplus of 200 gallons of milk in the economy. The government has to purchase this excess surplus from the market. Since the government revenue is the tax revenue, the non–milk-drinking taxpayers have to pay for the milk indirectly.

(c):

To determine

The effect of ceiling price of $4 per gallon of milk.

(c):

Expert Solution

Explanation of Solution

When the government enacts the ceiling price of $4 per gallon, the market price will be $4 per gallon. The quantity demanded at this price is 400 gallons per month, whereas the quantity supplied is 200 gallons per month. This means that there will be a shortage of 200 gallons of milk in the economy. The government has to ration the milk in order to prevent the black marketing of milk. This is caused due to the action of the government to keep the price of milk below the equilibrium level of $6 per gallon.

Answer 6

Chapter 4, Problem 1SQP

(a):

To determine

The equilibrium demand and supply of milk.

(a):

Expert Solution

Explanation of Solution

The equilibrium demand and supply of milk in the economy can be obtained at the point of intersection of the market demand and supply curves in the economy. The market demand and supply schedules are given, and a graph can be plotted on the basis of the schedule as follows:

Price per gallon	Quantity demanded (millions of gallons)	Quantity supplied (millions of gallons)
$10.00	100	500
8.00	200	400
6.00	300	300
4.00	400	200
2.00	500	100

Based on this table, it is identified that the quantity supplied increases as price increases and there is a direct and positive relation between the price and quantity supplied. On the other hand, there is a negative relation between the quantity demanded and price because the quantity demanded decreases as price increases. Thus, the quantity demanded will be indicated by a downward sloping curve, whereas the quantity supplied will be indicated by an upward sloping curve as follows:

Economics For Today, Chapter 4, Problem 1SQP

From the diagram, it is observed that the market demand for milk and the supply of milk intersect at Point E. The corresponding quantity at Point E will be the equilibrium quantity of milk, and the corresponding price at Point E will be the equilibrium price of the milk. Thus, at the point of equilibrium E, the equilibrium price is $6 per gallon and the quantity is 300 gallons per month.

Economics Concept Introduction

Equilibrium: Equilibrium in the market is obtained at the point where the market demand is equal to the market supply, and there is no excess demand or supply present in the economy.

Answer 7

Chapter 4, Problem 1SQP

(a):

To determine

The equilibrium demand and supply of milk.

Answer 8

(a):

Expert Solution

Explanation of Solution

The equilibrium demand and supply of milk in the economy can be obtained at the point of intersection of the market demand and supply curves in the economy. The market demand and supply schedules are given, and a graph can be plotted on the basis of the schedule as follows:

Price per gallon	Quantity demanded (millions of gallons)	Quantity supplied (millions of gallons)
$10.00	100	500
8.00	200	400
6.00	300	300
4.00	400	200
2.00	500	100

Based on this table, it is identified that the quantity supplied increases as price increases and there is a direct and positive relation between the price and quantity supplied. On the other hand, there is a negative relation between the quantity demanded and price because the quantity demanded decreases as price increases. Thus, the quantity demanded will be indicated by a downward sloping curve, whereas the quantity supplied will be indicated by an upward sloping curve as follows:

Economics For Today, Chapter 4, Problem 1SQP

From the diagram, it is observed that the market demand for milk and the supply of milk intersect at Point E. The corresponding quantity at Point E will be the equilibrium quantity of milk, and the corresponding price at Point E will be the equilibrium price of the milk. Thus, at the point of equilibrium E, the equilibrium price is $6 per gallon and the quantity is 300 gallons per month.

Answer 9

(a):

Expert Solution

Answer 10

(a):

Expert Solution

Answer 11

Expert Solution

Answer 12

Economics Concept Introduction

Equilibrium: Equilibrium in the market is obtained at the point where the market demand is equal to the market supply, and there is no excess demand or supply present in the economy.

Answer 13

(b):

To determine

The effect of support price of $8 per gallon of milk.

(b):

Expert Solution

Explanation of Solution

From the diagram, it is observed that the market demand for milk and the supply of milk intersect at Point E. The corresponding quantity Point E will be the equilibrium quantity of milk and the corresponding price Point E will be the equilibrium price of the milk. Thus, at the point of equilibrium E, the equilibrium price is $6 per gallon and the quantity is 300 gallons per month.

However, when the government enacts the support price of $8 per gallon, the market price will be $8 per gallon. The quantity demanded at this price is 200 gallons per month, whereas the quantity supplied is 400 gallons per month. This means that there will be a surplus of 200 gallons of milk in the economy. The government has to purchase this excess surplus from the market. Since the government revenue is the tax revenue, the non–milk-drinking taxpayers have to pay for the milk indirectly.

Answer 14

(b):

To determine

The effect of support price of $8 per gallon of milk.

Answer 15

(b):

Expert Solution

Explanation of Solution

From the diagram, it is observed that the market demand for milk and the supply of milk intersect at Point E. The corresponding quantity Point E will be the equilibrium quantity of milk and the corresponding price Point E will be the equilibrium price of the milk. Thus, at the point of equilibrium E, the equilibrium price is $6 per gallon and the quantity is 300 gallons per month.

However, when the government enacts the support price of $8 per gallon, the market price will be $8 per gallon. The quantity demanded at this price is 200 gallons per month, whereas the quantity supplied is 400 gallons per month. This means that there will be a surplus of 200 gallons of milk in the economy. The government has to purchase this excess surplus from the market. Since the government revenue is the tax revenue, the non–milk-drinking taxpayers have to pay for the milk indirectly.

Answer 16

(b):

Expert Solution

Answer 17

(b):

Expert Solution

Answer 18

Expert Solution

Answer 19

(c):

To determine

The effect of ceiling price of $4 per gallon of milk.

(c):

Expert Solution

Explanation of Solution

When the government enacts the ceiling price of $4 per gallon, the market price will be $4 per gallon. The quantity demanded at this price is 400 gallons per month, whereas the quantity supplied is 200 gallons per month. This means that there will be a shortage of 200 gallons of milk in the economy. The government has to ration the milk in order to prevent the black marketing of milk. This is caused due to the action of the government to keep the price of milk below the equilibrium level of $6 per gallon.

Answer 20

(c):

To determine

The effect of ceiling price of $4 per gallon of milk.

Answer 21

(c):

Expert Solution

Explanation of Solution

When the government enacts the ceiling price of $4 per gallon, the market price will be $4 per gallon. The quantity demanded at this price is 400 gallons per month, whereas the quantity supplied is 200 gallons per month. This means that there will be a shortage of 200 gallons of milk in the economy. The government has to ration the milk in order to prevent the black marketing of milk. This is caused due to the action of the government to keep the price of milk below the equilibrium level of $6 per gallon.