Problem 1. The table below shows the demand and supply schedules for gum:QuantityDemanded(millions of packs per week)QuantitySuppliedPrice(cents per pack)2018060301608040140100501201206010014070801608060180904020010020220a. Draw a graph of the market for gum and mark in the equilibrium price and quantity.b. Suppose that the price of gum is 70¢ a pack. Describe the situation in the gum market andexplain how the price adjusts.c. Suppose that the price of gum is 30¢ a pack. Describe the situation in the gum market andexplain how the price adjusts. Problem 2. In Problem 1, a fire destroys some factories that produce gum and the quantity ofgum supplied decreases by 40 million packs a week at each price.a. Explain what happens in the market for gum and draw a graph to illustrate the changes.b. If at the time the fire occurs there is an increase in the teenage population, which increasesthe quantity of gum demanded by 40 million packs a week at each price, what are the newequilibrium price and quantity of gum? Illustrate these changes on your graph.

Answered: Problem 1. The table below shows the…

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter4: The Market Forces Of Supply And Demand

Section: Chapter Questions

Problem 8PA

See similar textbooks

Related questions

Question

Problem 1. The table below shows the demand and supply schedules for gum:
Quantity
Demanded
(millions of packs per week)
Quantity
Supplied
Price
(cents per pack)
20
180
60
30
160
80
40
140
100
50
120
120
60
100
140
70
80
160
80
60
180
90
40
200
100
20
220
a. Draw a graph of the market for gum and mark in the equilibrium price and quantity.
b. Suppose that the price of gum is 70¢ a pack. Describe the situation in the gum market and
explain how the price adjusts.
c. Suppose that the price of gum is 30¢ a pack. Describe the situation in the gum market and
explain how the price adjusts.

Problem 2. In Problem 1, a fire destroys some factories that produce gum and the quantity of
gum supplied decreases by 40 million packs a week at each price.
a. Explain what happens in the market for gum and draw a graph to illustrate the changes.
b. If at the time the fire occurs there is an increase in the teenage population, which increases
the quantity of gum demanded by 40 million packs a week at each price, what are the new
equilibrium price and quantity of gum? Illustrate these changes on your graph.

Expert Solution

Step 1

We’ll answer the first question since the exact one wasn’t specified. Please submit a new question specifying the one you’d like answered.

Answer (1):

Given,

(a). Equilibrium occurs where the demand and supply curves intersect each other. The corresponding quantity is the equilibrium quantity and the corresponding price is the equilibrium price.

Graphical presentation:

According to the above figure, the x-axis measures the quantity of gum, and the y-axis measures the price of gum. D is the demand curve and S is the supply curve of gum. Equilibrium in this market occurs at point E because at point E the demand and the supply curve intersect each other. The corresponding equilibrium quantity is 120 million packs and the equilibrium price is 50 cents per pack.

$E q u i l i b r i u m q u a n t i t y = 120 m i l l i o n p a c k s p e r w e e k E q u i l i b r i u m p r i c e = 50 ¢ a p a c k$

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions