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In the applet above, the horizontal axis, labeled q, represents the number of weekly cabins rentals at Cook Forest State Park. The vertical axis,
labeled p, represents the price to rent a cabin for a week. The blue graph gives information about the demand for these weekly cabin rentals, while
the red graph gives data for the supply of the weekly cabin rentals. The input box labeled q will allow you to enter a number of weekly cabin rentals
to obtain information about demand and supply using points A and B. Recall that a market is in equilibrium when supply equals demand. This is
represented graphically by point E = (Q,p) in the applet.
(a) Find the equilibrium point (Q, p) and use it to complete the sentences below. Make sure you use an ordered pair for the equilibrium point.
Since the equilibrium point is the cabin rental market is in equilibrium when the weekly rental price is $
At this price, there will be
cabins demanded and supplied. This means that the revenue generated from cabin rentals when the market is in equilibrium will be $
(b) A market will be in surplus when the market price (that is, the supply price) is above the equilibrium price since the quantity supplied will
exceed the quantity demanded at those prices. Find the quantities of cabins supplied for which this market will be in surplus. Write your answer in
interval notation.
This market will be in surplus when the number of weekly cabin rentals is in the interval on the q-axis.
(c) A market will be in shortage when the market price (this is, the supply price) is below the equilibrium price since the quantity supplied will be
less than the quantity demanded at that price. Find the quantities of cabins supplied for which this market will be in surplus. Write your answer in
interval notation.
This market will be in shortage when the number of weekly cabin rentals is in the interval on the q-axis.
(d) Type q = 64 into the input box in the applet. Use points A and B to complete the following sentences.
When the weekly rental price is $
there will be cabins demanded. Cook Forest is willing to supply cabins at a price of $
market price the number of cabins will be in ??? since this price is ??? the equilibrium price.
At this