2. Equilibrium and the adjustment process Aa Aa The following calculator depicts

Question

2. Equilibrium and the adjustment process Aa Aa The following calculator depicts the market for computer keyboards. The downward-sloping (blue) line represents demand, and the upward-sloping (orange) line represents supply. You can enter a price (in dollars) into the Price o Keyboard box to see the quantity demanded and quantity supplied at that price. Use the calculator to help you answer the following questions. You will not be graded on any changes you make to the calculator Tool tip: Use your mouse to drag the green line on the graph. The values in the boxes on the right side of the calculator will change accordingly. You can also directly change the values in the boxes with the white background b clicking in the box and typing. When you click the Calculate button, the graph and any related values will change accordingly PRICE (Dollars per keyboard 50 + CALCULATOR Price of a Keyboard Dollars 25 Quantity Supplied [Keyboards per month 40 Quantity Demanded Keyboards per month 450 675 30 20 10 + 0 150 300 450 600 750 900 1050 1200 1350 QUANTITY (Keyboards The equilibrium price of a keyboard in is market is per keyboard, and the equilibrium quantity is is keyboards bought and sold per month. Suppose the price of a keyboard is $25. In this case, there would be month, which would exert of pressure on prices Now, suppose that the price of a keyboard is $12. In this case, there would be keyboards per month, which would exert of pressure on prices

Explanation / Answer

Equlibrium price is the price at which demand is equal to supply. So, in this case the curve intersect at price 20. So is the case of equilibrium quantity , which is 600 units.

At price of 25, Supply is more than demand. so there would be supply of 675 keyboards per month , which would exert downward pressure on prices.

At price of 12 , Demand is more than supply. So there would be demand of 840 keyboards per month , which would exert upward pressure on prices

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