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Chapter 3: Q.17 (page 78)

How can you locate the equilibrium point on a

demand and supply graph?

Short Answer

Expert verified

The point where demand curve and supply curve intersect each other considered as equilibrium.

Step by step solution

01

Step 1.  Concept

In a market, the demand curve shows the relationship between the price and the quantity demanded. The supply curve shows the relationship between the price and the quantity supplied.

02

Step 2.Demand-Supply Curve

We can locate the equilibrium point on a demand and supply graph, where both the demand curve and supply curve intersect each other at a certain point.

Explanation-

The demand curve has a downward sloping that shows the inverse relationship between price & quantity.

The supply curve has an upward sloping that reflects a positive relationship between price and quantity.

A certain point where both curves intersect refers to as Equilibrium.

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Most popular questions from this chapter

Does a price ceiling increase or decrease the number of transactions in a market? Why? What about a price floor?

Will supply curves have the same shape in all

markets? If not, how will they differ?

Suppose the price of gasoline is \(1.60 per gallon. Is the quantity demanded higher or lower than at the equilibrium price of \)1.40 per gallon?

A low-income country decides to set a price ceiling on bread so it can make sure that bread is affordable to the poor. Table 3.11 provides the conditions of demand and supply. What are the equilibrium price and equilibrium quantity before the price ceiling? What will be the excess demand or the shortage (that is, quantity demanded minus quantity supplied) be if the price ceiling is set at \(2.40? At \)2.00? At \(3.60?

PriceQdQs
\)1.609,0005,000
\(2.008,5005,500
\)2.408,0006,400
\(2.807,5007,500
\)3.207,0009,000
\(3.606,50011,000
\)4.006,00015,000

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
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