   Chapter 3, Problem 1WNG

Chapter
Section
Textbook Problem

Suppose the price is $10, the quantity supplied is 50 units, and the quantity demanded is 100 units. For every$ 1 rise in price, the quantity supplied rises by 5 units and the quantity demanded falls by 5 units. What is the equilibrium price and quantity?

To determine

Calculation of equilibrium price and quantity.

Explanation

The change in demand due to changes in price can be calculated using the following formula:

Change in demand=Inital demand(Change in quantity)×Change in price        (1)

Substitute the respective values in Equation (1) to calculate the change in demand for increasing the price by $1. Change in demand=100(5)×1=1005=95 When the price increases by$1, the quantity demand would decrease to 95 units.

The change in supply due to changes in price can be calculated using the following formula:

Change in supply=Inital supply+(Change in quantity)×Change in price        (2)

Substitute the respective values in Equation (2) to calculate the change in supply for increasing the price by \$1

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

List and discuss three key facts about economic fluctuations.

Brief Principles of Macroeconomics (MindTap Course List)

The bank service charge requires a journal entry to record its effects the cash account.

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

BOND VALUATION Bond X is noncallable and has 20 years to maturity, a 9% annual coupon, and a 1,000 par value. Y...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List) 