Question

question 1) Laser pointers became unpopular while technology improved in producing the laser pointers. What happens to the equilibrium price and quantity?

question 2)

The demand and supply schedule are as follows:

$	Qd	Qs
1	5	1
2	4	2
3	3	3
4	2	4
5	1	5

a) What is the equilibrium price and quantity?

b) What would happen if the government set the price at $5?

Answer 1

1) When the laser pointers become unpopular but the technology increases then the supply of laser pointers increases whereas price decreases. but the demand curve shifts to the left.so the equilibrium quantity will remain the same whereas the price will decrease.

2)

$	Qd	Qs
1	5	1
2	4	2
3	3	3
4	2	4
5	1	5

a) Equilibrium price and quantity is where the supply is equal to the demand

So, equilibrium price = $3 and equilibrium quantity = 3

b) If the government sets the price at $5

QD=1, QS=5

As the quantity supplied is greater than quantity demanded so this will create a surplus of Q= 5-1 =4 in the market.