Question

**Price Equilibrium and Quantity Equilibrium**

**Assume Economy Ashland produces Pepsi.**

**a) In the space provided below show the Pepsi market by
graphing the coffee demand and supply curves. Label the Demand
curve D1, Supply curve S1, Equilibrium point E1, Price Equilibrium
P1, and Quantity Equilibrium Q1, both axis**

**Now assume that the beverage backing/shipping industry
develops new technology to better transport/produce soda which
Pepsi incorporates. At the same time price of pizza (a
complementary good to Pepsi) increases.**

**b) In sentences, describe what will happen to market
supply and market demand for Pepsi. In the graph above, denote
these changes if any with D2 for Demand curve two, S2 for Supply
curve two, P2 for price equilibrium 2, E2 for equilibrium quantity,
and Q2 for quantity equilibrium. (8 points)**

Answer #1

(a) In following graph, equilibrium is at point E1 where D1 intersects S1 with price P1 and quantity Q1.

(b) New technology will lower production cost, increasing supply, which will shift S1 rightward to S2, decreasing price and increasing quantity. At the same time, higher price of a complement good will decrease the demand for Pepsi, shifting its demand curve leftward from D1 to D2, decreasing price and decreasing quantity. The net effect is a definite decrease in price, but quantity may rise, fall or remain the same on basis of whether the rightward shift in supply is higher than, lower than or equal in magnitude to the leftward shift in demand. In above graph, D2 and S2 intersect at point E2 with lower price P2. In graph, leftward shift in demand equals rightward shift in supply, so quantity is unchanged at Q1.

55)Suppose Qs is the quantity supplied at a given price
for brown rice and Qd is the quantity demanded at the same given
price for brown rice. Which of the following market conditions
produces an upward movement of the price for brown
rice?
(a)Qs =1,000, Qd =860
(b)Qs =850, Qd=850
(c)Qs=750, Qd=1,000
(d)Qs=1,000, Qd=1,000
(57)Which of the following pairs of goods would be
considered complementary?
(a)Coca-Cola and Pepsi
(b)Radios and Televisions
(c)Computers and computer software
(d)Compact discs and cassette tapes...

Suppose a market where the equilibrium price and quantity are
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Determine the linear demand curve assuming the price elasticity
of demand is –½.
Determine the linear supply curve assuming the price elasticity
of supply is 2.

Show, using a supply & demand graph, the effect on the
equilibrium price and quantity of the good in question of the
following events. Assume markets are initially in equilibrium.
These are qualitative answers. An original and new market
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Part 1: Assume the
inflation rate is high in the economy. Using the infinite line
tool, draw the initial economy in long-run equilibrium. Label the
short-run demand curve AD1, the short-run supply curve SRAS1 and
the long-run supply curve LRAS1. Be sure to plot the initial
equilibrium using the double drop line tool and label it E1.
Part 2: Now use the
copy tool to demonstrate the long run price level adjustment to a
money supply increase. Label the curves...

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market.
Label the supply S1 and the demand D1. Label the vertical axis
P for Price and label the horizontal axis Q for Quantity of Milk.
Label on the vertical axis the equilibrium price as P1. Label on
the horizontal axis the equilibrium quantity as Q1.
Assume now that the price of Breakfast Cereals has increased
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(b) Would the Supply Curve for Milk increase, decrease or...

1: Assume that demand for a commodity is represented by the
equation P = 10 – 0.2 Q d, and supply by the equation P = 5+ 0.2 Qs
where Qd and Q s are quantity demanded and quantity supplied,
respectively, and P is the Price. Use the equilibrium condition Qs
= Qd 1: Solve the equations to determine equilibrium price.
2: Now determine equilibrium quantity.
3: Graph the two equations to substantiate your answers and
label these two graphs...

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the economy. Draw a supply and demand curve for each answer and
provide a brief one sentence explanation.
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Demand for Dok P=60-0.5Q
supply P=12+0,5Q
1.what is the equilibrium price, quantity, consumer surplus and
producer surplus.
2.suppose the demand curve increases by 12 unit at given price.
Hold everything constant, what is new equilibrium price, quantity,
consumer surplus and producer surplus.
3.use the original demand and supply curve in part one. assume
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for local consumers if the world price is 24. What is price local
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1. The market for toasters is a competitive market. Suppose that
the quantity of toasters supplied per year depends as follows on
the price of a toaster:
Price
(dollars per toaster)
Quantity supplied
(millions of toasters)
32
4.0
34
5.0
36
5.5
38
6.0
40
6.5
a. On a piece of graph paper, plot the supply curve for
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Exhibit 5-3
Use the following information about demand and supply schedules to
answer the question.
Price
D1
D2
S1
S2
$12
5
9
19
14
$10
8
12
17
12
$ 8
11
15
15
10
$ 6
13
18
13
8
$ 4
16
21
11
6
$ 2
18
24
9
4
Refer to Exhibit 5-3. If D 2 and S
1 represent the demand and supply schedules in a
particular market, the equilibrium price and quantity are...

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