Chapter 3 1. Given the following data, identify the amount of shortage or surplu
ID: 1144425 • Letter: C
Question
Chapter 3 1. Given the following data, identify the amount of shortage or surplus that would exist at a price of (a) $5.00 (b) $3.00 (c) $1.00 the equilibrium price? How would the equilibrium price and quantity change if Alice left the market? Price $5.00 $4.00 $3.00 $2.00 $1.00 Quantity demanded1 2 3 Al Betsy Daisy Eddie Market Total $5.00 $4.00 $3.00 $2.00 $1.00 Price Quantity supplied Alice Butch Connie Dutch Ellen Market Total Role of Government 1. Assuming a 5 percent sales tax is levied on all consumption, complete the following table. Percent of Income Paid in Taxes Income Consumption Sales Tax 20,000 0,000 30,000 18,000 50,000 35,000 100,000 80,000 Is this tax progressive, regressive or proportional?Explanation / Answer
The demand for good is an inverse relationship between price and quantity. The equation of the demand curve gives the quantity demanded as a function of price. The graphical relationship between price and quantity demanded is depicted by the demand curve. Any point on the demand curve shows the quantity consumer demands for any particular price. The inverse demand curve is represents price as a function of quantity.
The supply for good is the direct relationship between price and quantity. The equation of the supply curve gives the quantity supplied as a function of price. The graphical relationship between price and quantity supplied is depicted by the supply curve. Any point on the supply curve shows the quantity producers supply for any particular price. The inverse supply curve represents price as a function of quantity.
The equilibrium is the point at which the quantity demanded by the consumer equals the quantity supplied by the producers at a particular price. It is the point of intersection between demand and supply curve.
The table below gives the total market demand and supply at various prices
Price
5
4
3
2
1
Market total Quantity demanded
5
10
13
15
22
Market total quantity supplied
26
19
16
15
7
Supply after Alice left
23
16
13
12
4
From the table it is evident that the initial market equilibrium where quantity demanded equals supply occurs at price level $2.00. The equilibrium quantity was 15.
After Alice left the supply group the supply at each prices falls by quantity supplied by her, which is 3. The new equilibrium occurs at $3.00 with equilibrium quantity 13.
The shortsges in a market occurs when quantity demanded at prevailing price is greater than quantity supplied. On the other hand, the surplus occurs when quantity demanded at prevailing price is less than quantity supplied..
Price
5
4
3
2
1
Market total Quantity demanded
5
10
13
15
22
Market total quantity supplied
26
19
16
15
7
Supply after Alice left
23
16
13
12
4
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.