1) Below is the market schedule for NFL Jerseys 150 Supply 120 90 -Demand 60 -su
ID: 1141095 • Letter: 1
Question
1) Below is the market schedule for NFL Jerseys 150 Supply 120 90 -Demand 60 -supply Demand 30 20 40 50 30 Quantity of erseys 10 a) What is the equilibrium price and quantity? b) Suppose the market price is $120. Is there a surplus or shortage of NFL jerseys? What will happen to get the price back to equilibrium? If the market price is $60, is there a surplus or shortage of NFL jerseys? What will happen to get the price back to equilibrium c) Demand shifted to the right and the new equilibrium price is $120. What is the new equilibrium quantity? What are the possible reasons for the rightward shift? d) Suppose supply shifted to the left and the new equilibrium price is $120. What is the new equilibrium quantity? What are the possible reasons for the leftward shift? e)Explanation / Answer
Req a: Equilibrium price = 90 Equilibrium Qty = 30 The equilibrium point is where supply and demand curve intersect each other. Req b: When price is 120, there is a surplus in the market by 20 units. As supply = 40 units and demand =20 units and supply is more than demand. When there is an excess supply than demand, there will be downward pressure on price and price will come down at equilbrium price of 90. Req c: When price is 60, there is a shortage in the market by 20 units. As supply = 20 units and demand =40 units and supply is less than demand. When there is an excess demand than supply, there will be upward pressure on price and price will come up at equilbrium price of 90. Req d: When demand increases and new equilibrium price is 120. Then Equilibrium quantiity is 40 units. The reasons for rightward shift in demand: * Increase in income * Increase in price of substitute * Decreasse in price of complimennts goods * Future expectation on rise in pricess of goods. Req e: When supply decraeses and new equilibrium price is 120. The equilibrium quantity is 20 units. The reason for leftward shift in supply: *Increase in cost of inputs *Prices of other related goods increases * downgrading of technology.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.