00:01
Hello, let's start with part a.
00:05
Oops, let me read clearly, part a.
00:12
Let's draw the appropriate diagram for this market.
00:19
So here we have demand and supply.
00:30
So we have supply.
00:35
We have demand.
00:38
And this is our equilibrium price and quantity.
00:42
This is price this is quantity and now we have the new price which is oh sorry it's not three it's two and then we have another price now it's a three and when price is three maybe i can use another color when price is three the quantity demanded will be equal to 3 ,000 and quantity supply it will be equal to 4 ,500 kents per month okay now let's calculate the answer to the part b let's calculate the price of assistive demand between prices 2 and 3 so it will be equal to if we use the midpoint approach if we have an increase from 2 to 3, quantity would be 3 ,000 minus the initial quantity divided by the midpoint and we divide this by the change in the price.
02:18
So new prices 3 minus 2 and divided by the midpoint again.
02:24
And if we calculate our answer would be negative oops sorry i think i made a mistake here so it will be equal to no no it's any yeah it's negative 0 .8 3 and now let's calculate the price or of supply using the same approach supply increased because the law of supply we have this midpoint and divide by the same change in the poor rise so here we have 300 over this amount it's 0 .17 so they both are in the last because in the absolute value it's less than one.
04:32
It's not greater, it's less than one.
04:37
And the same for supply.
04:41
They both are less than one...