Question

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The following is data for a competitive market

Price $/unit	Quantity Demanded (units per hour)	Quantity Supplied (units per hour)
35	0	60
30	2	50
25	4	40
20	6	30
15	8	20
10	10	10
5	12	0

1. What is the minimum selling price for the 40^th unit? (1 mark)
2. What is the marginal benefit of the 6^th unit? (1 mark)
3. At what price is there a shortage or excess demand of 12 units? (1 mark)
4. What is the equilibrium price and quantity in this market? (1 mark)
5. Changes occur in the market. Demand increases by 2 units at each price and supply decreases by 10 units at each price. What is the new equilibrium price and quantity?
6. How do you explain the resulting new equilibrium quantity? Please answer in one sentence.

Answer 1

The minimum selling price for the 40th unit= $25

The marginal benefit of the 6th unit= $20

Excess demand of 12 units is when price= $5

The equilibrium price and quantity in this market=

Equilibrium Price=$10

Equilibrium quantity=10

reason- Equilibrium is where demand = Supply

After changes occur in the market,

New Equilibrium Price= $15

New Equilibrium quantity= 10

When quantity demanded rises by 2 units, At price= $15, New quantity demanded=8+2=10

When quantity supplied falls by 10 units, at price= $15, new quantity supplied= 20-10=10

answered by: anonymous