Question
Suppose there are four gas stations in town. The quantity firms are willing to supply each...
Suppose there are four gas stations in town. The quantity firms are willing to supply each week at various prices is provided in the accompanying table.
Determine the quantity supplied for the entire market at each price, then move the points on the graph to create the market supply curve.
| Price per gallon | Firm A (gallons per week) |
Firm B (gallons per week) |
Firm C (gallons per week) |
Firm D (gallons per week) |
|---|---|---|---|---|
| $1 | 0 | 1,000 | 1,000 | 0 |
| $2 | 2,000 | 2,000 | 2,000 | 1,000 |
| $3 | 4,000 | 3,000 | 4,000 | 3,000 |
| $4 | 6,000 | 4,000 | 5,000 | 5,000 |
| $5 | 8,000 | 5,000 | 6,000 | 9,000 |
a. At $1, market supply is ______ gallons.
b. At $2, market supply is______ gallons.
c. At $3, market supply is______ gallons.
d. At $4, market supply is______ gallons.
e. At $5, market supply is ______ gallons.
f. When the price increases from $3 to $5, the quantity supplied in the market increases from ______ to _____ gallons per week.
g. Place the points on the graph to plot the market supply.
Homework Answers
Answer #1
We can find out the market supply by the method of horizontal summation by adding up the supply of each firm at a given price:
Market supply is calculated in the below table:
| Price per gallon | Firm A | Firm B | Firm C | Firm D | Market supply |
| (gallons per week) | (gallons per week) | (gallons per week) | (gallons per week) | ||
| $1 | 0 | 1,000 | 1,000 | 0 | 2,000.00 |
| $2 | 2,000 | 2,000 | 2,000 | 1,000 | 7,000.00 |
| $3 | 4,000 | 3,000 | 4,000 | 3,000 | 14,000.00 |
| $4 | 6,000 | 4,000 | 5,000 | 5,000 | 20,000.00 |
| $5 | 8,000 | 5,000 | 6,000 | 9,000 | 28,000.00 |
So,
a. At $1, market supply is 2,000.00 gallons.
b. At $2, market supply is 7,000.00 gallons.
c. At $3, market supply is 14,000.00 gallons.
d. At $4, market supply is 20,000.00 gallons.
e. At $5, market supply is 28,000.00 gallons.
f. When the price increases from $3 to $5, the quantity supplied in the market increases from 14,000.00 to 28,000.00 gallons per week.
g.
Graph of the market supply:
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