Economics: Principles and Policy (MindTap Course List)
13th Edition
ISBN: 9781305280595
Author: William J. Baumol, Alan S. Blinder
Publisher: Cengage Learning
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Chapter 4, Problem 4DQ
To determine
Illustration of
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It is claimed that price floors and price ceilings both reduce the actual quantity exchanged in a market. Use a diagram or diagrams to support this conclusion, and explain the common sense behind it.
Assume that the following represents a supply/demand diagram. Please indicate what labels should replace letters (a) through (e) in the diagram (identify the label with the letter).
(a)
(c)
(e)
(d)
(b)
Demand and supply often shift in the retail market for gasoline. Here are two demand curves and two supply curves for gallons of gasoline in the month of May in a small town in Maine. Some of the data are missing.
Using the table, answer the following questions:
Quantities Demanded Quantities Supplied
Price
D1
D2
S1
S2
$ 4.00
5,000
7,500
9,000
9,500
6,000
8,000
8,000
9,000
2.00
8,500
8,500
9,000
5,000
Instructions: Enter your answers as whole numbers.
A) use the following facts to fill in the missing data in the table. If demand is D1 and supply is S1, the equilibrium quantity is 7,000 gallons per month. When demand is D2 and suppy is S1, the equilibrium price is $ 3.00 per galllon. When demand is D2 and supply is S1, there is an excess demand of 4,000 gallons per month at a price of $ 1.00 per gallon. If demand is D1 and supply is S2, the equilibrium quantity is 8,000 gallons per month.
B) Compare the two…
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Economics: Principles and Policy (MindTap Course List)
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- Complete the following table by selecting the term that matches each definition. Definition The claim that, other things being equal, the quantity supplied of a good increases when the price of that good rises The amount of a good that sellers are willing and able to supply at a given price A graphical object showing the relationship between the price of a good and the amount that sellers are willing and able to supply at various prices A table showing the relationship between the price of a good and the amount of it that sellers are willing and able to supply at various prices PRICE (Dollars per Record) 20 18 Apply your understanding of the previous key terms by completing the following scenario with the appropriate terminology. 16 14 12 10 8 4 Your professor claims that one of the curves found on the following graph correctly illustrates the supply curve for records: 2 0 0 $₂ S 1 1 2 6 7 3 5 QUANTITY (Millions of Records) 4 Quantity Supplied 8 9 10 Supply Curve O (?) O O Supply…arrow_forwardCarefully explain what is happening in the following markets. Indicate the impact if any on demand, supply, price and quantity. In the market for airline tickets, airline carriers have drastically cut fares for international air travel resulting in 3% increase in ticket sales. Meanwhile, recent health considerations due to covid -19 have cause and 11% reduction in the demand for international travel. (i) Impact on Demand? (ii) Impact on Supply? (iii) Impact on Price? (iv) Impact on Quantity?arrow_forwardTo answer this question only a diagram with annotations is required. Suppose beer and peanuts are complements. In anticipation of warm weather conditions, Injabulo Breweries, the brewers of Number One beer, increased the production of Number One beer. Show on a diagram how this will affect the market for peanuts. Indicate how the equilibrium price and equilibrium quantity of peanuts will change. The direction of any changes should be indicated using arrows.arrow_forward
- What happens to the equilibrium price and quantity of a good (such as alcohol) if you prohibit its use and sale? Demonstrate using supply and demand graphical analysis.arrow_forwardLet us take another look at the supply and demand of widgets as outlined in our previous Assignment No. 3: Price (P): $40 $35 $30 $25 $20 $15 $10 $5 $0 Quantity Demanded (QD): 0 5 10 15 20 25 30 35 40 Quantity Supplied (QS): 36 32 28 24 20 16 8 4 0 Use Excel charts to show how the supply and demand curves would shift if the sellers would all of a sudden be willing to sell 4 additional units (beyond what the above table suggests) at any given price, and at the same time that the buyers would reduce the amount that they would be willing to buy at any given price by 5 units. What would be the new equilibrium price and quantity after this happens?arrow_forwardI only need part D to be answered . Thank you! Demand and supply often shift in the retail market for gasoline. Here are two demand curves and two supply curves for gallons of gasoline in the month of May in a small town in Maine. Some of the data are missing. Using the table, answer the following questions: Quantities Demanded Quantities SuppliedPrice D1 D2 S1 S2$7.00 5,000 7,500 9,000 9,5006,000 8,000 8,000 9,0005.00 8,500 8,5009,000 5,000 Use the following facts to fill in the missing data in the table. If demand is D1 and supply is S1, the equilibrium quantity is 7,000 gallons per month. When demand is D2 and supply is S1, the equilibrium price is $6.00 per gallon. When demand is D2 and supply is S1, there is an excess demand of 4,000 gallons per month at a price of $4.00 per gallon. If demand is D1 and supply is S2, the equilibrium quantity is 8,000 gallons per month. b. Compare the two equilibriums: In the first, demand is D1 and supply is S1. In the second, demand is D1 and…arrow_forward
- Carefully explain what is happening in the following market. Indicate the impact if any on demand, supply, price and quality. In the market for airline tickets, airline carriers have drastically cut fares for international air trave resulting in 3% increase in ticket sales. meanwhile, recent health considerations due to COVID-19 have caused an 11% reduction in the demand for international travel Impact on supply impact on price impact on quantity impact on demandarrow_forwardConsider each scenario independently. In each of the following cases state, using verbal and graphical analysis Show the correct increase / decrease in the demand or supply Show correct labels Show what will happen to the equilibrium price Show what will happen to the equilibrium quantity Show a brief explanation A tax on gun buyers. A binding price floor on gunsarrow_forwardThe task I am struggling with: Determine the supply and demand function and the equilibrium point.Graph the results.Demand. If a given product is priced at $7 per unit, there is a demand for 4 units;if a given product is priced at $6 per unit, there is a demand for 8 units.Supply. If a given product is priced at $9 per unit, suppliers are willing to produce4 units; if a given product is priced at $23 per unit, suppliers are willing toproduce 12 units. Thank you very much.arrow_forward
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