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Unformatted text preview: Supply is not affected. The equilibrium price and quantity of minivans both rise, as Figure 1 shows. e. The reduction in peoples' wealth caused by a stock-market crash reduces their income, leading to a reduction in the demand for minivans, because minivans are likely a normal good. Supply is not affected. As a result, both the equilibrium price and the equilibrium quantity decline, as Figure 4 shows. Figure 4 2 14. a. As Figure 5 shows, the supply curve is vertical. The constant quantity supplied makes sense because the basketball arena has a fixed number of seats at any price. Figure 5 b. Quantity supplied equals quantity demanded at a price of $8. The equilibrium quantity is 8,000 tickets. c. Price Quantity Demanded Quantity Supplied $4 14,000 8,000 $8 11,000 8,000 $12 8,000 8,000 $16 5,000 8,000 $20 2,000 8,000 The new equilibrium price will be $12, which equates quantity demanded to quantity supplied. The equilibrium quantity remains 8,000 tickets. 3...
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- Spring '07