Table 3.8 shows information on the demand and supply for...

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 price and quantity from the graph? How can you determine the equilibrium price and quantity from 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?

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 price
and quantity from the graph? How can you determine the equilibrium price and quantity
from 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?

Key Concepts

Shortage and Surplus

A shortage occurs when the quantity demanded exceeds the quantity supplied at a given price, indicating that consumers are willing to buy more than producers are offering at that price. Conversely, a surplus exists when the quantity supplied exceeds the quantity demanded, meaning producers are offering more of the good than consumers are willing to buy. The magnitude of the shortage or surplus can be measured by the difference between the two quantities.

Market Equilibrium

Market equilibrium occurs when the quantity demanded equals the quantity supplied, meaning there is no inherent tendency for the price to change as the market clears. This equilibrium can be identified by the intersection of the demand and supply curves on a graph or by finding the point in a table where the two quantities align.

Graphical Analysis

Graphical analysis involves plotting the demand and supply curves on a graph, which allows for a visual representation of the market mechanism. The intersection point of these curves indicates the equilibrium price and quantity. This method aids in understanding how changes in various factors might shift the curves and affect the equilibrium.

Demand Curve

The demand curve represents the relationship between the price of a good and the quantity that consumers are willing and able to purchase at each price level. It typically slopes downward, indicating that as prices decrease, the quantity demanded increases, reflecting the inverse relationship between price and demand.

Supply Curve

The supply curve illustrates the relationship between the price of a good and the quantity that producers are willing and able to sell. It generally slopes upward, suggesting that as prices rise, producers are willing to supply more of the good, thereby showing the direct relationship between price and supply.

Transcript

00:01 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.

00:11 So part a asks, what is the quantity demanded and the quantity supplied at a price of $210? so to answer this, we're going to go to our table.

00:21 We're going to look at the price column, and we're going to go down to where that price column has a value of $210.

00:27 So if we find that, we're going to look at that row.

00:30 So qd quantity demanded in that row next to the price equals 210.

00:36 The value in that box is 28.

00:38 But it's important to note that in this question, they said these quantities were in thousands.

00:43 So the actual quantity demanded is 28 ,000.

00:47 So staying in that row where price equals 210, we have a qs, which is quantity supplied.

00:53 And that value in that box is 56.

00:57 But again, this is in thousands.

00:59 So it's 56 ,000 bikes.

01:03 So what that means is when the price of a bicycle is $210, the quantity demanded in the market is $28 ,000, and the quantity supplied is $56 ,000.

01:14 Okay, part b asks, at what price is the quantity supplied equal to $48 ,000? so we can, again, go to our table to answer this, look at our qs column and find where qs has a value of 48.

01:27 Because it's in thousands, it'll just say 48.

01:29 So once we find that point where qs is 48, we can look at the row to the left to find the corresponding price.

01:38 So when qs is 48, the price of a bike is $180.

01:45 All right.

01:46 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.

01:57 So we're going to 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.

02:07 And i just use the values from the table to create these ranges for the price and quantity.

02:14 So it doesn't really matter which curve you start with.

02:17 I'm going to start with the demand curve since that's the first column after price in our table.

02:22 And so to graph this curve, we're going to start by just plotting all the points that are in this table.

02:28 So for each price, we're going to plot quantity demanded at that price.

02:32 So starting up top, our first row, at a price of $120, qd is 50.

02:38 Next row says, at a price of 150, qd is 40 ,000.

02:45 Price of 180, qd is 32 ,000.

02:49 And price of 210, qd is 28.

02:52 And at a price of 240, quantity demanded is 24.

02:58 So we have all these points, and we can connect them to create this.

03:03 A little off.

03:04 This best fit line will be our demand curve.

03:08 So you can mark that with a little d and our demand curve is downward sloping, which is good because that's, demand curves will always be downward sloping.

03:16 So that's a good way to check to make sure you're doing it correctly.

03:19 Okay, so now we're ready to start our supply curve and we go through the same process.

03:23 We're going to look at each price and plot the qs this time quantity supplied.

03:28 So at a price of 120 up top, qs is 36.

03:34 At a price of 150, qs is 40.

03:37 And this is on the demand curve.

03:39 That's definitely worth taking note of...

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