Economics Assignment : Supply and Demand Concepts

Supply and Demand Concepts

Price	300	270	240	210	180	150	120	90	60	30	10
Quantity Supply	1800	1700	1600	1500	1400	1300	1200	1100	1000	900	800
Quantity Demanded	500	600	700	800	1000	1100	1200	1300	1400	1500	1600

supply and demand

Quantity Supply 1800 1700 1600 1500 1400 1300 1200 1100 1000 900 800 300 270 240 210 180 150 120 90 60 30 10 Quantity Demanded 500 600 700 800 1000 1100 1200 1300 1400 1500 1600 300 270 240 210 180 150 120 90 60 30 10

quantity

price

2. The laws of supply and demand is illustrated by the law of market forces its states "When there is a shortage, the price rises; and when there is a surplus, the price will fall." the example here is buyers must pay a higher price to get more; and seller Electronic dog feeders at price of $300 will produce more .Graph shows price rises. But a rising price is exactly what is needed to restore equilibrium because a shortage arises when the price falls below the equilibrium price. And if the quantity supplied exceeds the quantity demanded is a surplus, suppliers must cut the price to sell more ; buyers are pleased to take the lower price .But the falling price is exactly what the market needs to restore equilibrium because a surplus arises when the price is above the equilibrium price. (Mankiw,2011,pg.67)   3. The equilibrium price is 120.00 per each and the equilibrium quantity is 1200.The price is in Balance .When P* and Q* the equilibrium where supply and demand curve cross it must satisfy the market-clearing condition which is│Q d =Qs 4. If the price floor of 180.00set above the equilibrium of 120.00 creates a surplus, increased search activities and, illegal trading. Price floor places a legal minimum and is imposed to keep the pricing up percieved to cheap. The surplus is because sellers can't bid down the price. (Mankiw,2011,pg 117) 5. A decrease in price of 90.00 ceiling (price cap) is set below the equilibrium can have a powerful effect on the market. The reason is that it attempts to prevent the feeders price from rising high enough to regulate the quantities demand and supplied. Any selling above the ceiling is black market and illegal. It can also create shortage in supply. Price ceiling places a legal maximum. Price control may also raise the price paid by consumers . From the demand curve ,we can see that consumers are willing to pay 120.00 for a reduced quantity (Qṣ) available. They could find ways to willingly pay this in forms of bribes ,fees ,etc. 6. The decrease in price by 50% Because a lower price increases the quantity demanded, the demand curve slopes downward. (Mankiw ,2011,pg67-68) 7. When income rises this is a variable that shifts the demand curve to the right.(Mankiw ,2011,pg 71)This is a change in demand "refers to a shift of the demand curve ,causing something other than a change in price. 8. When a decrease in the number of sellers (supply) ↓decrease meaning a change in any influence on selling other than a change in price of the cases themselves changes supply and it shifts the supply curve to left . 9. When faced with scarcity,people try to get the most out of their income .In this example the income of the consumers increased , If the demand for a good rises when income falls, the good is called an inferior good. An example of an inferior good might be bus rides. As your income falls, you are less likely to buy a car or take a cab, and more likely to ride the bus.(Mankiw ,2011,pg 70-71)So in this case the feeders are a NORMAL good is a good for which demand increases when income increases and demand decreases when income decreases. In #7 a change in any influence on buying plans of the feeders,other than price of the good itself ,changes demand and shifts the demand curve leftward from D₀ to D₂.

EQULIBRIUM

graph for 6 and 7 ,8

Price	300	270	240	210	180	150	120	90	60	30	10
Quantity Supply	1800	1700	1600	1500	1400	1300	1200	1100	1000	900	80
Quantity Demanded	500	600	700	800	1000	1100	1200	1300	1400	1500	1600

Demand Curve decrease in price

Supply 1800 1700 1600 1500 1400 1300 1200 1100 1000 900 80 300 270 240 210 180 150 120 90 60 30 10 Demand 500 600 700 800 1000 1100 1200 1300 1400 1500 1600 300 270 240 210 180 150 120 90 60 30 10

Quantity

Price

Supply Curve decrease in sellers

Supply 1800 1700 1600 1500 1400 1300 1200 1100 1000 900 80 300 270 240 210 180 150 120 90 60 30 10 Demand 500 600 700 800 1000 1100 1200 1300 1400 1500 1600 300 270 240 210 180 150 120 90 60 30 10

Quantity

Price

Quantity Demanded 300 270 240 210 180 150 120 90 60 30 10 500 600 700 800 1000 1100 1200 1300 1400 1500 1600

Curve shift

as the income of consumers increase shifts the demand curve to right Question 7

#7

Sheet3

Price	2	4	6	8	10	12	14	16	18	20	22	24
Quantity Supply	7000	8000	9000	10000	11000	12000	13000	14000	15000	16000	17000	18000
Quantity Demanded	17000	16000	15000	14000	13000	12000	11000	10000	8000	7000	6000	5000