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The following table summarizes information about the market for principles of economics textbooks: Price Quantity Demanded per Year Quantity Supplied per Year $45 4,300 300 55 2,300 700 65 1,300 1,300 75 800 2,100 85 650 3,100 What is the market equilibrium price and quantity of textbooks? To quell outrage over tuition increases, the college places a $55 limit on the price of textbooks. How many textbooks will be sold now? While the price limit is still in effect, automated publishing increases the efficiency of textbook production. Show graphically the likely effect of this innovation on the market price and quantity.

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Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992

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Section
BuyFindarrow_forward

Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992
Chapter 4, Problem 4TY
Textbook Problem
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The following table summarizes information about the market for principles of economics textbooks:

Price Quantity Demanded per Year Quantity Supplied per Year
$45 4,300 300
55 2,300 700
65 1,300 1,300
75 800 2,100
85 650 3,100

  1. What is the market equilibrium price and quantity of textbooks?
  2. To quell outrage over tuition increases, the college places a $55 limit on the price of textbooks. How many textbooks will be sold now?
  3. While the price limit is still in effect, automated publishing increases the efficiency of textbook production. Show graphically the likely effect of this innovation on the market price and quantity.

To determine

(a)

The market equilibrium price and quantity.

Explanation of Solution

The equilibrium price and quantity exist where the quantity demanded is equal to the quantity supplied. Thus, the quantity demanded is e...

To determine

(b)

To compute:

The textbooks quantity that is sold after a price ceiling.

To determine

(c)

Graph showing the effect of innovation.

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