QUESTION 4 Price Quantity Quantity (dollars per demanded supplied cellular phone

Question

QUESTION 4 Price Quantity Quantity (dollars per demanded supplied cellular phone) (thousands) (thousands demand is (thousa 100 80 50 20 100 80 60 40 100 Using the data int o table above, the equilibrium quantity and equilibrium price for a cellular telephone are 60,000nd $5. 100,000 and $20. 80,000 and $80 50,000 and $100. QUESTION 5 Price Quantity Quantity dollars per demanded supplied cellular phone) (thousands) (t housands 50 100 s0 100 so 60 40 60 100 20 Using the data in the table above, at the price of $80 a phone, a shortage of 25.000 celiular telephones occurs the market is in equilibrium. a chortage of 55,000 cellular telephones occurs a surplus of 25,000 cellular telephones occurs

Explanation / Answer

Answer 4 - 60000 and $50

Reason - equilibrium is achieved when quantity demanded is equal to quantity supplied. So at price of $50 equilibrium is achieved with 60000 units because at this price quantity demanded is equal to quantity supplied.

Answer 2 - a surplus of 25000 cellular telephones occur

Reason - at price $80, quantity supplied is 25000 more than the demand ( i.e surplus = quantity supplied - quantity demanded , therefore surplus = 80000 - 55000 units = 25000 units)

So there is a surplus quantity available in market above quantity demand for 25000 units.

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