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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.