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Table 3.8 shows information on the demand and supply for bicycles, where the quantities of bicycles are measured in thousands.a. What is the quantity demanded and the quantity supplied at a price of $210?b. At what price is the quantity supplied equal to 48,000?c. Graph the demand and supply curve for bicycles. How can you determine the equilibrium priceand quantity from the graph? How can you determine the equilibrium price and quantityfrom the table? What are the equilibrium price and equilibrium quantity?d. If the price was $120, what would the quantities demanded and supplied be? Would a shortage or surplus exist? If so, how large would the shortage or surplus be?

a) At price $\$ 210,$ quantity demanded is $28,000$ bicycles and quantity supplied is $56,000$ bicycles.b) At price $\$ 180,$ quantity supplied will be equal to $48,000$ bicycles.c) Graphd) $14,000$

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Chapter 3

Demand and Supply

Introduction

How Markets Work

Markets and Welfare

Mahonri O.

January 20, 2021

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All right, We're looking at question number 53 which gives us a table of information about the price quantity demanded and quantity supplied in this bicycle market. So part asks, what is the quantity demanded and the quantity supplied at a price of $210. So to answer this, we're gonna go to our table, we're gonna get the price column, and we're gonna go down to where that price column has a value of $210. So if we find that we're gonna look at that row so qd quantity demanded in that row next to the price equals to 10. The value in that box is 28. But it's important to note that in this question, they said these quantities were in thousands, so the actual quantity demanded is 28,000. So staying in that row, where price equals to 10, we have a Q s, which is quantity supplied, and that value in that box is 56. Um, but I got this is in 1000 so it's 56 1000 bikes. So what that means is when the price of a bicycle is $210. The quantity demanded in the market is 28,000. On the quantity supplied is 56,000. Okay, Part B asks at what price is the quantity supplied equal to 48,000, so we can again goto our table to answer this. Look at our Q S column and find work. US has a value of 48 because it's in thousands. It'll just say 48. So once we find that point where Q s is 48 we can look at the row, um, to the left to find the corresponding price. So when Q s is 48 the price of a bike is $180. All right, moving on to Part C. It's asking us to graph the demand and supply curves and asking us to find the equilibrium, price and equilibrium quantity using the graph and the table. So we're gonna graph our demand and supply curves, and it's important to always be making sure we're putting price on the Y axis and quantity on the X axis for these curves, and I just use the values from the table. Thio create these ranges for the price and quantity so it doesn't really matter which curve you start with. I'm going to start with the demand curve since that's the first column after price in our table. And so to graph this curve, we're going to start by just plotting all the points that are in this table. So for each price, we're gonna plot quantity demanded at that price. So starting up top our first row at a price of $120. Qd is 50. Next row says at a price of 1 50 Que de is 40,000 price of 1. 80 qd is 32,000 and price of 2 10 cuties 28 not a price 202 140 quantity demanded is 24. So we have all these points and we can connect them to create this little off. This best fit line will be our demand curves. You can mark it with a little D and our demand curve is downward sloping, which is good because that's demand. Curves will always be downward sloping, So that's a good way to check to make sure you're doing it correctly. Okay, so now we're ready to start our supply curve and we go through the same process, we're gonna look at each price and plot the QS this time. Quantity supplied. So at a price of 120 up, top Q S is 36 at a price of 1 50. Qs is 40. This is on the demand curve that's definitely worth taking note of mhm. And at a price of 1 80. Qs is 48 at a price of 2. 10. Q S is 56 and at a price of 240 Q s is 70. So we have all those points again. We're just gonna connect them upset. I'm making very curvy lines today, and this will become our supply curve. So now we're gonna use these curves to find or equilibrium, price and quantity. So our equilibrium is the point at which the quantity demanded is equal to the quantity supplied, so this could be found by looking at the intersection of our demand and supply curves. This intersection is a point at which the quantity that the consumers are demanding and that the suppliers are supplying is equal. So that's definitely the equilibrium, so we can look at this point and we can find the equilibrium price by finding that corresponding price, which is $150. Okay. And then we can also find the equilibrium quantity by still looking at that point and finding what that quantity is at that point. So that will be 40. But of course, again, this is and thousands So 40,000 bicycles is our equilibrium quantity. Eso We could definitely do this using the table to we confined these values actually pretty nice because they gave us This is an exact value. Um, there is a point on this table where qd and QSR equal, and that's when they're both equal to 40 and where the corresponding price is $150. So that is the way to find it from the table as well as the graph. Okay. Moving on to Part D asks if the price was $120 what would the quantities demanded and supplied be? Would there be a shortage or surplus? And if so, how large would that be? So to answer the first part of this, we can just go back to our table, Do do what we were doing before looking at where the price equals $120. We see that the quantity demanded is 50,000 bicycles and the quantity supplied up there in the first row is 36,000 bicycles. So now we can think a little bit intuitively about whether this is a shortage or surplus or something else. So thinking about the demand, the demand is greater than the supply. So if more people are demanding, if more bikes are demanded that are supplied, that means there is a shortage for consumers. This can also be pretty easily recognized. I'm using the graph. So looking at our graph, we confined where this where the price is $120. We see that the demand quantity is greater than the supply quantity. So that's always gonna be where there's a shortage. There's more demanded than supplied. So this area of the graph is shortages and up here, where there's more supply than demand. These would be surplus is up here, so that's a good way Thio pretty easily recognize. So we're definitely in the shortage area. And to find out what the shortages, we can just, um, subtract the quantity supplied from the quantity demanded. So we're just going to Dio 50,000 minus 36,000, and that gives us a shortage of 14 1000 bikes. 14,000 bikes is our shortage at this, um, at this price and that concludes part.

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