At a price of $1.00 a bottle, the decreased quantity demanded equals the decreased quantity supplied and there is a neither a shortage nor a surplus. So the price doesn't change, 1.50 but the equilibrium quantity decreases. The price doesn't change. But a larger decrease in demand would have lowered Price (dollars per bottle) 2.00 the price and a larger decrease in supply would have raised the price. Reset 1.00 0.50 0 ? 8 Both demand and supply decrease 9 Quantity decreases S₁ •D₁ So •Do 10 11 12 Quantity (millions of bottles per day)

At a price of $1.00 a bottle, the decreased quantity demanded equals the decreased quantity supplied and there is a neither a shortage nor a surplus. So the price doesn't change, 1.50 but the equilibrium quantity decreases. The price doesn't change. But a larger decrease in demand would have lowered Price (dollars per bottle) 2.00 the price and a larger decrease in supply would have raised the price. Reset 1.00 0.50 0 ? 8 Both demand and supply decrease 9 Quantity decreases S₁ •D₁ So •Do 10 11 12 Quantity (millions of bottles per day)

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter4: Prices: Free, Controlled, And Relative

Section: Chapter Questions

Problem 2WNG

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