ECON-206 Lecture Notes - Lecture 4: Health Canada, Price Ceiling, Demand Curve
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Chapter 4: bringing supply and demand together: market equilibrium. The following table shows the monthly demand and supply in the market for shoes in vancouver. Quantity demanded quantity supplied (dollars per pair of shoes) (pairs of shoes) (pairs of shoes) Based on the preceding table, plot the demand for shoes on the following graph using the blue points (circle symbol). Next, plot the supply of shoes using the orange points (square symbol). Finally, use the black point (cross symbol) to indicate the equilibrium price and quantity in the market for shoes. Each point on the market demand curve for shoes corresponds to an entry in the demand schedule. For example, at a price of per pair, the quantity of shoes demanded is 900 pairs per month. Therefore, the point (900, 40) lies on the market demand curve for shoes. Similarly, each point on the market supply curve corresponds to an entry from the market supply column.
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Price |
Quantity Demanded |
Quantity Supplied |
0.00 |
1350 |
0 |
5.00 |
1200 |
300 |
10.00 |
1050 |
600 |
15.00 |
900 Â |
900 |
20.00 |
750 |
1200 |
25.00 |
600 |
1500 |
30.00 |
450 |
1800 |
35.00 |
300 |
2100 |
Â
a) The table shows the demand and supply schedules for tuna sashimi (sushi). Plot both Demand and Supply on a piece of paper and attach it as a photo to this document. Label everything that’s relevant and find the equilibrium price and quantity.
b) Calculate the consumer surplus, producer surplus, and total surplus at the market equilibrium.
c) Now suppose the mayor of Vancouver (who loves sushi) thinks the equilibrium market price of tuna sashimi is too high. Briefly describe how the mayor can use price controls to change the price so he is happy. Show this in the graph in part (a).
Price |
Quantity Demanded |
Quantity Supplied |
0.00 |
1350 |
0 |
5.00 |
1200 |
300 |
10.00 |
1050 |
600 |
15.00 |
900 Â |
900 |
20.00 |
750 |
1200 |
25.00 |
600 |
1500 |
30.00 |
450 |
1800 |
35.00 |
300 |
2100 |
Â
a) The table shows the demand and supply schedules for tuna sashimi (sushi). Plot both Demand and Supply on a piece of paper and attach it as a photo to this document. Labeleverything that’s relevant and find the equilibrium price and quantity.
b) Calculate the consumer surplus, producer surplus, and total surplus at the market equilibrium.
c) Now suppose the mayor of Vancouver (who loves sushi) thinks the equilibrium market price of tuna sashimi is too high. Briefly describe how the mayor can use price controls to change the price so he is happy. Show this in the graph in part (a).