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Home / Questions / The demand and supply functions for sweatshirts (the basic grey kind) are as follows: Dem

The demand and supply functions for sweatshirts (the basic grey kind) are as follows: Dem

The demand and supply functions for sweatshirts (the basic grey kind) are as follows:

DemandSupply

QuantityQuantity

DemandedSupplied

Price              (per period)Price(per period)

              $10              15,000$1022,000

9              15,500919,000

8              16,000816,000

7              16,500713,000

6              17,000610,000

5              17,50057,000

4              18,00044,000

3              18,50031,000

2              19,00020

a. Graph the demand and supply functions for sweatshirts and find the equilibrium price and quantity.

b. What effect will an increase in the price of gym shoes (a complement) have on the equilibrium price and quantity of sweatshirts, all else constant? Illustrate the effect using your graph.

c. What effect will a wage increase for workers in the sweatshirt industry have on the equilibrium price and quantity of sweatshirts, all else constant? Illustrate the effect using your graph.

 

94) The demand and supply functions for sweatshirts (the basic grey kind) are as follows:

 

              DemandSupply

QuantityQuantity

DemandedSupplied

Price              (per period)Price(per period)

              $10              15,000$1022,000

9              15,500919,000

8              16,000816,000

7              16,500713,000

6              17,000610,000

5              17,50057,000

4              18,00044,000

3              18,50031,000

2              19,00020

 

The equations for the demand and supply functions above are as follows:

 

Qd = 20,000 - 500P

Qs = -8,000 + 3000P

a. Solve for the equilibrium price and quantity. (Hint: at equilibrium, quantity supplied equals quantity demanded.)

b. Assume the supply function changes to:

Qs = -5,000 + 3000P

 

Does supply increase or decrease? What is the new equilibrium price and quantity?

Dec 07 2019 View more View Less

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