For questions 14 through 16, refer to the graph below. This...

For questions 14 through 16, refer to the graph below. This graph illustrates the supply and demand for \"good Z.\" 14. In this market there would be at a price of $20.00. A. excess demand B. excess supply C. both excess demand and excess supply D. neither excess demand nor excess supply 15. Focusing on the 2,000$^{th}$ unit, the buyer of this unit has a reservation price A. exactly equal to $10.00 B. greater than $17.75 but less than $27.75 C. exactly equal to $27.75 D. greater than $27.75 but less than $45.20 16. Imposing a per unit tax of $10 on buyers in this market would generate tax revenue of A. exactly $36,000 B. more than $36,000 but less than $69,000 C. exactly $69,000 D. more than $69,000 but less than $102,000

Transcript

00:02 Hello, this problem is about demand and supply curves.

00:06 We are given two tables, each of which would be representing a demand curve or a supply curve.

00:16 So let's have a look at demand and supply.

00:22 Okay, so what is a demand function? it relates the quantity queue that the customers, are willing to buy to buy at a price, at a given price.

00:49 Alright, now the graph of the demand function is such that, let's see, from the consumers point of view, in these graphs we have q on the horizontal axis, which sometimes is a bit awkward because we are talking about q being a function of p, of price in dollars right and we're accustomed to having the variable that represents the function value to be on the y -axis but it doesn't matter we can we can graph the relationship here as well so let's see when the price is high when the price is high consumers are willing not to buy great quantity so with a high price we would have points somewhere here all right now with a low price, when the price is low, p is low, then the consumers are going to be willing to buy a greater quantity.

01:53 So what we have typically is that a demand function has a pq graph that slopes downwards.

02:03 Now, what is the supply function? the supply function also relates q and p the price per unit, but from the manufacturers.

02:13 Point of view.

02:15 So this is the quantity that manufacturers are willing, or suppliers, manufacturers are willing to produce at price be.

02:37 So given a price, what is the queue that the manufacturers are willing to produce? let's have a look at their, let's have a look at their typical, how the supply curve typically looks like.

02:50 So, when the price is low, when the price is low, the manufacturers say, there's not much profit in that.

02:57 So they produce small quantities, right? but as the price gets higher, they are willing to produce more and more and more and more.

03:07 So a typical slope, pardon me, a typical supply curve has a positive slope most of the time.

03:16 Now we have a look at the table.

03:18 Let's have a look at table, one, uh, 20.

03:21 What happens with the price? the price goes from 182 to 187, 167, 143.

03:34 So, price is decreasing.

03:37 Price decreases.

03:42 And what happens with the quantity? the quantity goes from 5 to 10 to 15 and so on.

03:51 The quantity increases.

03:53 Now, where do we see, where do we see when the price, see when the price increases, when the price increases, the quantity decreases.

04:07 Here on the supply, when price increases, the quantity increases as well.

04:13 So what we have here, table 128 represents this curve here.

04:19 Okay, this is a demand curve.

04:22 The demand curve.

04:24 And table 129, what happens there with price? price goes from 6, 35, 66 and so on.

04:36 So price rises.

04:39 What happens with the quantity? it goes from 5, 10, 15, and so on, the quantity rises as well.

04:47 So as the price rises, the quantity rises, we see that this is a supply.

04:54 Okay? a supply function.

04:56 Now, on to the questions.

05:00 So, which is which? question a, we have answered that.

05:05 Table 129 is the supply function.

05:07 Table 128 is the demand function.

05:10 Question b, if the price is 155, if the price is 155, approximately what is the demand? that is, the wording of the question is, how many items would consumers purchase? so we look into the demand table 128, and we see that under 153, we have 15.

05:45 Okay, so when the price is 150, ah, 155.

05:53 Right, and before 153, we had 167.

05:58 167 has 10 items.

06:01 So where would 155 be? it would be here close to 153.

06:06 So we estimate that these are values from table 128.

06:17 So given that 155, 155 is going to be close to 153.

06:26 We estimate roughly 14.

06:26 The q is going to be close to 153.

06:27 We estimate roughly 14.

06:31 To be 14 when the price is 155...

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