1.Suppose the market for batteries looks as follows: 2 $7 4 Price Supply 30 2010Quantity Demand What is the equilibrium price and quantity? 1.Price: $4, Quantity: 20 2.Consider the following supply and demand tables for bread. Draw the supply and demand curves for this market. What is the equilibrium price and quantity? Price of One LoafQuantity SuppliedQuantity Demanded $0.501075 $12055 $23535 $35025 $56010 2. Supply Price of bread $2 Demand Quantity 35 Price: $2, Quantity: 35 Solution Solution Solution Equilibrium: How Supply and Demand Determine Prices•C H A P T E R4 •S-27 Cowen2e_CH04_Solutions.indd S-27 Cowen2e_CH04_Solutions.inddS-279/19/11 7:54 AM 9/19/117:54 AM
3.If the price of a one-bedroom apartment in Washington, DC, is currently $1,000 per month, but the supply and demand curves look as follows, then is there a shortage or surplus of apartments? What would we expect to happen to prices? Why? Solution S-28•C H A P T E R4• Equilibrium: How Supply and Demand Determine Prices
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4.Determine the equilibrium quantity and price without drawing a graph. Price of Good XQuantity SuppliedQuantity Demanded $22100225 $25115200 $30130175 $32150150 $40170110 4.Quantity: 150, Price: $32 5.In the figure below how many pounds of sugar are sellers willing to sell at a price of $20? How much is demanded at this price? What is the buyer’s willingness to pay when the quantity is 20 lb? Is this combination of $20 per pound and a quantity of 20 lb an equilibrium? If not, identify the unexploited gains from trade. $45 20 Price of sugar per pound 203040 Quantity of sugar (in lbs) Supply Demand 5.At a price of $20 sellers are willing to supply 20 lb and buyers are demanding 40 lb. The buyer’s willingness to pay at a quantity of 20 is $45 so the buyers are Solution Solution Cowen2e_CH04_Solutions.indd S-28 Cowen2e_CH04_Solutions.inddS-289/19/11 7:54 AM 9/19/117:54 AM
willing to pay more than the $20 sellers require to sell an additional pound of sugar. Thus, this is not an equilibrium. Unexploited gains from trade are shaded. $45 20 Price of sugar per pound 203040 Quantity of sugar (in lbs)Supply Demand
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