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Chapter 3: Q.17 (page 78)

How can you locate the equilibrium point on a

demand and supply graph?

Short Answer

Expert verified

The point where demand curve and supply curve intersect each other considered as equilibrium.

Step by step solution

01

Step 1.  Concept

In a market, the demand curve shows the relationship between the price and the quantity demanded. The supply curve shows the relationship between the price and the quantity supplied.

02

Step 2.Demand-Supply Curve

We can locate the equilibrium point on a demand and supply graph, where both the demand curve and supply curve intersect each other at a certain point.

Explanation-

The demand curve has a downward sloping that shows the inverse relationship between price & quantity.

The supply curve has an upward sloping that reflects a positive relationship between price and quantity.

A certain point where both curves intersect refers to as Equilibrium.

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Most popular questions from this chapter

The computer market in recent years has seen many more computers sell at much lower prices. What shift in demand or supply is most likely to explain this outcome? Sketch a demand and supply diagram and explain your reasoning for each.

(a) A rise in demand

(b) A fall in demand

(c) A rise in supply

(d) A fall in supply

Does a price ceiling change the equilibrium price?

Name some factors that can cause a shift in the demand curve in markets for goods and services.

Table 3.9 illustrates the market's demand and supply for cheddar cheese. Graph the data and find the equilibrium. Next, create a table showing the change in quantity demanded or quantity supplied, and a graph of the new equilibrium, in each of the following situations:

(a) The price of milk, a key input for cheese production, rises, so that the supply decreases by 80pounds at every price.

(b) A new study says that eating cheese is good for your health, so that demand increases by 20%at every price.

Price per poundQdQs
\(3.00750540
\)3.20700600
\(3.40650650
\)3.60620700
\(3.80600720
\)4.00590730

A low-income country decides to set a price ceiling on bread so it can make sure that bread is affordable to the poor. Table 3.11 provides the conditions of demand and supply. What are the equilibrium price and equilibrium quantity before the price ceiling? What will be the excess demand or the shortage (that is, quantity demanded minus quantity supplied) be if the price ceiling is set at \(2.40? At \)2.00? At \(3.60?

PriceQdQs
\)1.609,0005,000
\(2.008,5005,500
\)2.408,0006,400
\(2.807,5007,500
\)3.207,0009,000
\(3.606,50011,000
\)4.006,00015,000
See all solutions

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