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remmylp remmylp
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A month ago
The market demand schedule and supply schedule for digital cameras is shown in the table below. Illustrate the answers with the help of a graph.
 
Price ($ per unit)Quantity Demanded (units)Quantity Supplied (units)
10400150
20360210
30300300
40240340
50200360

a) Determine the equilibrium quantity and price.
b) What is the excess demand in the market if the price is set at $20?
c) What is the excess supply in the market if the price is set at $40?
Textbook 

Macroeconomics


Edition: 3rd
Authors:
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schmienceschmience
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A month ago
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More solutions for this book are available here
a) The equilibrium quantity and price are determined at the point where the quantity demanded equals the quantity supplied. From the demand and supply schedule, it can be seen that when the price is $30 per unit, both the quantity supplied and the quantity demanded are equal to 300 units. Therefore, the equilibrium quantity is 300 units and the equilibrium price is $30 per unit. This is shown in the following figure.



b) If the price is set at $20, the quantity demanded is 360 units and the quantity supplied is 210 units, leading to excess demand of 150 units (360 − 210 = 150) in the market. This is shown in the following figure.



c) If the price is set at $40, the quantity demanded is 240 units and the quantity supplied is 340 units, leading to an excess supply of 100 units (340 − 240 = 100) in the market. This is shown in the following figure.



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remmylp Author
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A month ago
You make an excellent tutor!
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Yesterday
Thanks
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2 hours ago
Good timing, thanks!
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