Question 16 of 28 ch 3 hw question 8 clicked

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Question 16 of 28 - Ch. 3 HWQuestion 8 Clickedï‚·ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·Assignment Score:ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·
ï‚·ï‚·Question 16 of 28Suppose the accompanying graph depicts a market for one pound bags of candy. Place the linelabeledExcess Demandat a price that would generate an excess demand (shortage). Then,determine the size of the excess demand.Market for CandyPrice per bagQuantity (millions of bags)012345678910012345678910DSExcess DemandExcess Demand =million bagsSolutionExcess demand occurs when the quantity demanded is greater than the quantity supplied. At theequilibrium price, quantity demanded is equal to quantity supplied. Therefore, excess demandonly exists when the price is less than the equilibrium price. When price is above equilibrium,quantity supplied is greater than quantity demanded, resulting in excess supply, or a surplus.Graphically, equilibrium occurs at the intersection of the supply and demand curves. For thisproblem, the supply and demand curves intersect at a price of \$5. Of the three possible locationsfor the excess demand line, \$3 is the only one below the equilibrium.To calculate the size of the excess demand, find the difference between quantity demanded andquantity supplied at \$3. At \$3, quantity demanded is 7 million bags and quantity supplied is 3million bags. There are 4 million more bags demanded than supplied. Therefore, the excessdemand is 4 million bags.4
Question 17 of 28 - Ch. 3 HWQuestion 8 Clickedï‚·ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·ï‚·
ï‚·ï‚·Question 17 of 28Classify each scenario based on whether it will lead to upward or downward pressure on theequilibrium price of the good marked in bold.Upward pressure on priceDownward pressure on priceAnswer BankSolutionPrices adjust to changes in the market. Shifts in both supply and demand for a product affectprices. For example, the extra silt in Egypt leads to an abundance of cotton. This increasedsupply puts downward pressure on the price of cotton. Fears concerning a nuclear holocaust leadto an increased demand for twonkies, putting upward pressure on the price of twonkies. Badweather in the case of the Super Bowl and fears about mad cow disease reduce demand and putdownward pressure on the prices of tickets and beef, respectively.

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Term
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Angela, Vanessa