(a)
Assume the following information for
Demand | Demand | Supply | Supply |
Quantity demanded | Price | Quantity supplied | |
$10 | 10 | $1 | 10 |
$9 | 20 | $2 | 15 |
$8 | 30 | $3 | 20 |
$7 | 40 | $4 | 25 |
$6 | 50 | $5 | 30 |
$5 | 60 | $6 | 35 |
$4 | 70 | $7 | 40 |
$3 | 80 | $8 | 45 |
$2 | 90 | $9 | 50 |
$1 | 100 | $10 | 55 |
Illustrate demand and supply curve.

Answer to Problem 25P
Following graph represents the demand and supply curve of good Z
Explanation of Solution
The above graph represents the supply and demand curve of good Z. The intersecting point is the equilibrium point at which the demand for the products is equal to the supply of the products. The upward movement of the supply curve represents that with an increase in the price of the product the supplier will increase the supply whereas the downwards movement of the demand curve represents a decrease in demand of the product with an increase in the price of the product.
Introduction:
Demand and supply curve represents relationship between the quantity of product a supplier supplies in the market and quantity of product consumers demands. The point where supply and demand curve meets is referred to as
(b)
Assume the following information for demand and supply curve for good Z
Demand | Demand | Supply | Supply |
Price | Quantity demanded | Price | Quantity supplied |
$10 | 10 | $1 | 10 |
$9 | 20 | $2 | 15 |
$8 | 30 | $3 | 20 |
$7 | 40 | $4 | 25 |
$6 | 50 | $5 | 30 |
$5 | 60 | $6 | 35 |
$4 | 70 | $7 | 40 |
$3 | 80 | $8 | 45 |
$2 | 90 | $9 | 50 |
$1 | 100 | $10 | 55 |
Determine the equilibrium price and the quantity traded

Answer to Problem 25P
In the given data the equilibrium price is $7 and the quantity traded is 40 units
Explanation of Solution
In the given table, one can observe that at price $7 the amount of quantity supplied is equal to amount of quantity demanded that is 40
Therefore, the equilibrium price is $7 and the quantity traded is 40 units
Introduction:
Equilibrium price is the price at which the amount of quantity supplied is equal to the amount of quantity demanded, it is the price at which both the supplier and consumer is ready to trade the goods.
The amount of quantity traded in between in the suppliers and consumers are the
(c)
Assume the following information for demand and supply curve for good Z
Demand | Demand | Supply | Supply |
Price | Quantity demanded | Price | Quantity supplied |
$10 | 10 | $1 | 10 |
$9 | 20 | $2 | 15 |
$8 | 30 | $3 | 20 |
$7 | 40 | $4 | 25 |
$6 | 50 | $5 | 30 |
$5 | 60 | $6 | 35 |
$4 | 70 | $7 | 40 |
$3 | 80 | $8 | 45 |
$2 | 90 | $9 | 50 |
$1 | 100 | $10 | 55 |
Determine whether it is surplus or shortage at price $9

Answer to Problem 25P
At price $9 there is surplus of good Z by 30 units.
Explanation of Solution
In the given table at price, $9 quantity supplied is 50 units and quantity demanded is 20 units.
Since the quantity supplied is more than quantity demanded, therefore there is surplus at price $9.
To calculate surplus
Surplus= Qunatity Supplied−Qunatity Demanded=50−30=20
Thus the surplus at price $9 is 20 units
Introduction:
Surplus occurs when the quantity supplied by the supplier exceeds the quantity demanded in the market.
Shortage occurs when the quantity demanded by the consumers exceeds the quantity supplied by the supplier in the market.
(d)
Assume the following information for demand and supply curve for good Z
Demand | Demand | Supply | Supply |
Price | Quantity demanded | Price | Quantity supplied |
$10 | 10 | $1 | 10 |
$9 | 20 | $2 | 15 |
$8 | 30 | $3 | 20 |
$7 | 40 | $4 | 25 |
$6 | 50 | $5 | 30 |
$5 | 60 | $6 | 35 |
$4 | 70 | $7 | 40 |
$3 | 80 | $8 | 45 |
$2 | 90 | $9 | 50 |
$1 | 100 | $10 | 55 |
Determine whether it is surplus or shortage at price $3

Answer to Problem 25P
At price $3, there is shortage of good Z by 60 units
Explanation of Solution
In the given table at price, $3 the quantity supplied is 20 units and quantity demanded in 80 units, since the demand is more than the supply. Therefore, shortage of good will occur at price
To calculate shortage
Shortage=Quantity Demanded−Quantity Supplied=80−20=60
Therefore ate price $3 shortage of good Z is 60 units.
Introduction:
Surplus occurs when the quantity supplied by the supplier exceeds the quantity demanded in the market.
Shortage occurs when the quantity demanded by the consumers exceeds the quantity supplied by the supplier in the market
(e)
Assume the following information for demand and supply curve for good Z
Demand | Demand | Supply | Supply |
Price | Quantity demanded | Price | Quantity supplied |
$10 | 10 | $1 | 10 |
$9 | 20 | $2 | 15 |
$8 | 30 | $3 | 20 |
$7 | 40 | $4 | 25 |
$6 | 50 | $5 | 30 |
$5 | 60 | $6 | 35 |
$4 | 70 | $7 | 40 |
$3 | 80 | $8 | 45 |
$2 | 90 | $9 | 50 |
$1 | 100 | $10 | 55 |
Determine the new equilibrium price and quantity traded if demand for Z increased by 15 at every price.

Answer to Problem 25P
New equilibrium price of the good is $8 and the quantity traded is 45 units.
Explanation of Solution
According to the given situation, the quantity demanded increases by 15 units at every price point.
Therefore the new quantity demanded is represented in the table below
Demand | Demand | Demand | Supply | Supply |
Price | Quantity demanded | New Quantity after addition of 15 Units | Price | Quantity supplied |
$10 | 10 | 10+15=25 | $1 | 10 |
$9 | 20 | 20+15=35 | $2 | 15 |
$8 | 30 | 30+15=45 | $3 | 20 |
$7 | 40 | 40+15=55 | $4 | 25 |
$6 | 50 | 50+15=65 | $5 | 30 |
$5 | 60 | 60+15=75 | $6 | 35 |
$4 | 70 | 70+15=85 | $7 | 40 |
$3 | 80 | 80+15=95 | $8 | 45 |
$2 | 90 | 90+15=105 | $9 | 50 |
$1 | 100 | 100+15=115 | $10 | 55 |
After the addition of 15 units in quantity demanded column, one can observe the equilibrium price shifted at price $8 as the quantity supplied and demanded is equal and the quantity traded is 45 units.
Introduction:
Equilibrium price is the price at which the amount of quantity supplied is equal to the amount of quantity demanded, it is the price at which both the supplier and consumer is ready to trade the goods.
(f)
Assume the following information for demand and supply curve for good Z
Demand | Demand | Supply | Supply |
Price | Quantity demanded | Price | Quantity supplied |
$10 | 10 | $1 | 10 |
$9 | 20 | $2 | 15 |
$8 | 30 | $3 | 20 |
$7 | 40 | $4 | 25 |
$6 | 50 | $5 | 30 |
$5 | 60 | $6 | 35 |
$4 | 70 | $7 | 40 |
$3 | 80 | $8 | 45 |
$2 | 90 | $9 | 50 |
$1 | 100 | $10 | 55 |
Determine the new equilibrium price and quantity traded if the supply of Z is increased by 15 units

Answer to Problem 25P
When the supply is increased by 15 units the new equilibrium price will be $6 and the quantity traded is 60 units
Explanation of Solution
The new supply column when the supply of Z is increased by 15 units at each price point is shown as below
Demand | Demand | Supply | Supply | |
Price | Quantity demanded | Price | Quantity supplied | New quantity supplied with addition of 15 units |
$10 | 10 | $1 | 10 | 10+15=25 |
$9 | 20 | $2 | 15 | 15+15=30 |
$8 | 30 | $3 | 20 | 20+15=35 |
$7 | 40 | $4 | 25 | 25+15=40 |
$6 | 50 | $5 | 30 | 30+15=45 |
$5 | 60 | $6 | 35 | 35+15=50 |
$4 | 70 | $7 | 40 | 40+15=55 |
$3 | 80 | $8 | 45 | 45+15=60 |
$2 | 90 | $9 | 50 | 50+15=65 |
$1 | 100 | $10 | 55 | 55+15=70 |
After the addition of 15 units in the supply column one can observe that the equilibrium is shifted at price $6 with equilibrium quantity traded as 60 units.
Introduction:
Equilibrium price is the price at which the amount of quantity supplied is equal to the amount of quantity demanded, it is the price at which both the supplier and consumer is ready to trade the goods.
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