Demand and Supply schedules for a normal good A: Supply Schedule Qs 5,000 4,000 Demand Schedule QD 1,000 2,000 3,000 4,000 5,000 KD15 12 KD15 12 3,000 2,000 1,000 6 3 3 a) Draw the Demand curve and Supply curves on the same graph. b) Find the equilibrium price and equilibrium quantity. c) What will happen if price increases to 12KD? Will market experience surplus or shortage? Calculate. d) What will happen if price drops to 3 KD? Will market experience surplus or shortage? Calculate. e) Explain what will happen if there is, simultaneously, an increase in the average income of consumers and a decrease in the number of firms producing the good. Does the change affect supply or Demand? Draw on the previous graph the changes and indicate the effect on the price and quantity of equilibrium.

Demand and Supply schedules for a normal good A: Supply Schedule Qs 5,000 4,000 Demand Schedule QD 1,000 2,000 3,000 4,000 5,000 KD15 12 KD15 12 3,000 2,000 1,000 6 3 3 a) Draw the Demand curve and Supply curves on the same graph. b) Find the equilibrium price and equilibrium quantity. c) What will happen if price increases to 12KD? Will market experience surplus or shortage? Calculate. d) What will happen if price drops to 3 KD? Will market experience surplus or shortage? Calculate. e) Explain what will happen if there is, simultaneously, an increase in the average income of consumers and a decrease in the number of firms producing the good. Does the change affect supply or Demand? Draw on the previous graph the changes and indicate the effect on the price and quantity of equilibrium.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 6PA: Suppose that your demand schedule for DVDs is as follows: Price Quantity Demanded (income = 10,000)...

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