Download Equilibrium Price

Equilibrium Price
Handout 27
1. $.30
2. 3000 bags
3. Consumers would only buy 1000 bags while the supply
would be 5000 resulting in a surplus of 4000 bags.
4. Supplier would only supply 1000 bags while demand
would be 5000 resulting in a shortage of 4000 bags.
5. Demand curve is downward sloping, reflecting an
inverse relationship between the quantity demanded and
price; the supply curve slope3s upward to the right
reflecting a direct relationship between quantity supplied
and price.
Handout 28
1. B – There is increased demand and the same supply of
corn. Demand curve D1 shifts to the right, D2, causing an
increase in the equilibrium price from P1 to P2.
2. D – With improved technology, the cost of production
goes down, and with more suppliers, supply curve S1
moves to the right, causing a drop in the equilibrium price
from P1 to P2.
3. A – With fewer people going to the movies, the demand
curve D1, shifts to the left, D2, causing a decrease in price
from P1 to P2.
4. C – With fewer barbers in the industry, supply curve,.
S1, shifts to left, S2, reducing the supply of barbers, thus
causing the equilibrium price to rise from P1 to P2.