8) Suppose that in a recent market period, an industry wide survey determined th

Question

8) Suppose that in a recent market period, an industry wide survey determined the relationship between the price of prerecorded movie DVDs and the quantity supplied and quantity demanded shown in the table below and depicted in the graph.

1. Demand has (deceased, increased or remained the same)Suppose that a survey for a later market period indicates that the quantities supplied in the table are unchanged but the quantity demanded has increased by 30 million units at each price.

2. What is the new equilibrium price $______

3. What is the new equilibrium quantity?____million units

If a change in ceteris paribus conditions described below could cause the demand to increase, indicate yes Otherwise, indicate no

4. An increase in the number of buyers (No or Yes)

5. A decrease in the cost of production (No or Yes)

Consumer incomes decrease (DVDs are a normal good) (No or Yes)

6. The price of movie downloads rise (No or Yes)

7. The number of sellers increases (No or Yes)

Price Quantity Demanded Quantity Supplied $18 120 million 30 million $19 110 million 50 million $20 100 million 70 million $21 90 million 90 million $22 80 million 110 million

Explanation / Answer

80+30 = 110 = 110

New equilibrium Price = $22

New equilibrium Quantity = 110 Million

4. Yes

5. No

6. NO

7. NO

Thankyou !

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