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(More difficult) The demand and supply curves for T-shirts in Touristtown, U.S.A., are given by the following equations: Q = 24 , 000 − 500 P Q = 6 , 000 + 1 , 000 P where P is measured in dollars and Q is the number of T-shirts sold per year. Find the equilibrium price and quantity algebraically. If tourists decide they do not really like T-shirts that much, which of the following might be the new demand curve? Q = 21 , 000 − 500 P Q = 27 , 000 − 500 P Find the equilibrium price and quantity after the shift of the demand curve. If, instead, two new stores that sell T-shirts open up in town, which of the following might be the new supply curve? Q = 4 , 000 − 1 , 000 P Q = 9 , 000 + 1 , 000 P Find the equilibrium price and quantity after the shift of the supply curve

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Microeconomics: Principles & Policy

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

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Chapter
Section
BuyFindarrow_forward

Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992
Chapter 4, Problem 9TY
Textbook Problem
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(More difficult) The demand and supply curves for T-shirts in Touristtown, U.S.A., are given by the following equations:

Q = 24 , 000 500 P

Q = 6 , 000 + 1 , 000 P

where P is measured in dollars and Q is the number of T-shirts sold per year.

  1. Find the equilibrium price and quantity algebraically.
  2. If tourists decide they do not really like T-shirts that much, which of the following might be the new demand curve?

Q = 21 , 000 500 P

Q = 27 , 000 500 P

Find the equilibrium price and quantity after the shift of the demand curve.

  • If, instead, two new stores that sell T-shirts open up in town, which of the following might be the new supply curve?
  • Q = 4 , 000 1 , 000 P

    Q = 9 , 000 + 1 , 000 P

    Find the equilibrium price and quantity after the shift of the supply curve

    To determine

    (a)

    To find:

    The market equilibrium and the respective price and quantity.

    Explanation of Solution

    At market equilibrium, the market supply is equal to market demand. To find the equilibrium price and quantity, equate the market demand and supply curves as follows:

       Q=24,000-500P ...... (Demand curve Equation)Q=6,000+1000P.......(Supply curve Equation)Market Demand = Market Supply

    To determine

    (b)

    To Find:

    The new equilibrium price and quantity after the shift of the demand curve.

    To determine

    (c)

    To Find:

    The new equilibrium price and quantity after the shift of the supply curve.

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