Question

ECON - 102 - Microeconomics  

1. graph the supply curve.

Price	Quantity Demanded
$1200	1000
1000	2200
800	3000
600	4000
400	5000
200	10000

Price	Quantity Supplied
$1200	24000
1000	21000
800	8000
600	4000
200	1000
100	0

a. Draw the original Supply and Demand of solar panels on the same graph.  What is the equilibrium price and the equilibrium quantity?

b. What would be the specific result if the government put a price floor on solar panels at $1000?  Be specific as to the quantityof shortage or surplus.

Answer 1

The following figure answers the question. SS is the supply curve, DD is the demand curve Equilibrium is at point E

According to the diagram, The equilibrium occurs at point where DEMAND = SUPPLY

In the diagram that point is denoted by E, Where total quantity is 4,000 and price is $600

b) As the government puts a price floor, it creates a disequilibrium and the demand curve moves from point E to Point A(2,200) and the Supply curve moves from Point E to point B(21,000)

This creates an excess supply or SURPLUS in the market. The exact amount of SURPLUS is

21,000 - 2,200 = 18,800 solar panels

Hope this helps.

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