Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 3: Q.16 (page 78)

What is the relationship between quantity

demanded and quantity supplied at equilibrium? What is

the relationship when there is a shortage? What is the

relationship when there is a surplus?

Short Answer

Expert verified

At equilibrium, the quantity supplied is equal to the quantity demanded.

Step by step solution

01

Step 1.Quantity Demanded 

is the total number of goods and services purchased at a given price.

Quantity supplied means total units sold at the given price.

Equilibrium is when-

Quantity demanded=Quantity supplied

02

Step 2.when there is a shortage-

Demand for goods increases & supply decreases.

when there is a surplus-

demand decreases & supply increases

03

Step 3.Excess demand & supply diagram.

Explanation:

The quantity demanded is on X-axis

Price at Y-axis

Equilibrium at point E (Qd=Qs)

at price above equilibrium:

Quantity supplied>Quantity demanded

at price below equilibrium:

Quantity supplied<quantity demanded

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

What causes a movement along the demand curve?

What causes a movement along the supply curve?

Consider the demand for hamburgers. If the price

of a substitute good (for example, hot dogs) increases and the price of a complement good (for example, hamburger buns) increases, can you tell for sure what will happen to the demand for hamburgers? Why or why not? Illustrate your answer with a graph.

Many changes are affecting the market for oil. Predict how each of the following events will affect the equilibrium price and quantity in the market for oil. In each case, state how the event will affect the supply and demand diagram. Create a sketch of the diagram if necessary.

a. Cars are becoming more fuel efficient, and therefore get more miles to the gallon.

b. The winter is exceptionally cold.

c. A major discovery of new oil is made off the coast of Norway.

d. The economies of some major oil-using nations, like Japan, slow down.

e. A war in the Middle East disrupts oil-pumping schedules.

f. Landlords install additional insulation in buildings.

g. The price of solar energy falls dramatically.

h. Chemical companies invent a new, popular kind of plastic made from oil.

Table 3.10 shows the supply and demand for movie tickets in a city. Graph demand and supply and identify the equilibrium. Then calculate in a table and graph the effect of the following two changes.

(a) Three new nightclubs open. They offer decent bands and have no cover charge, but make their money by selling food and drink. As a result, demand for movie tickets falls by six units at every price.

(b) The city eliminates a tax that it placed on all local entertainment businesses. The result is that the quantity supplied of movies at any given price increases by 10%.

Price per poundQdQs
\(5.002616
\)6.002418
\(7.002220
\)8.002121
$9.002022

What is the difference between the supply and

the quantity supplied of a product, say milk? Explain

in words and show the difference on a graph with the

supply curve for milk.
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free