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Economics
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13 Jan 2018

Explain how supply and demand is used to determine market equilibrium. Apply the concepts using examples in the text or from work or personal experience.

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16 Jan 2018
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Related questions

QUESTION 01: Explain the concepts of Demand, supply and market equilibrium. Give real life examples to explain the shift in demand and supply and also explain the impact of a shift in demand or supply or both on the equilibrium price and quantity. (use appropriate diagrams)

QUESTION 02: Discuss the concept of Price Elasticity of Demand. Explain using suitable examples the various determinants of Price Elasticity of Demand.

The table below shows the demand and supply schedules for rolls of film.

Price

Quantity demanded

Quantity supplied

($ per roll)

(rolls per week)

(rolls per week)

2.00

3,000

1,000

3.00

2,500

1,500

4.00

2,000

2,000

5.00

1,500

2,500

6.00

1,000

3,000

a. Explain the concepts of demand, supply, and market equilibrium. What is the market equilibrium price for rolls of film? What is the equilibrium quantity?

b. If the price of film is $3 a roll, describe the situation in the film market. Is there shortage or surplus at this price? Explain how market equilibrium is restored.

c. A rise in income increases the quantity demanded by 1,000 rolls a week at each price. Draw a new table to account for this change in demand.

What will be the new equilibrium price? Which quantity will be traded? Explain how the film market adjusts to its new equilibrium.

d. The number of film production lines increases, and at the same time, people switch to digital cameras. How do these events influence demand and supply? Do they create a shortage or a surplus at the equilibrium price in part a? Describe how the price and quantity change.

The table below shows the demand and supply schedules for rolls of film.

Price

Quantity demanded

Quantity supplied

($ per roll)

(rolls per week)

(rolls per week)

2.00

3,000

1,000

3.00

2,500

1,500

4.00

2,000

2,000

5.00

1,500

2,500

6.00

1,000

3,000

a. Explain the concepts of demand, supply, and market equilibrium. What is the market equilibrium price for rolls of film? What is the equilibrium quantity?

b. If the price of film is $3 a roll, describe the situation in the film market. Is there shortage or surplus at this price? Explain how market equilibrium is restored.

c. A rise in income increases the quantity demanded by 1,000 rolls a week at each price. Draw a new table to account for this change in demand.

What will be the new equilibrium price? Which quantity will be traded? Explain how the film market adjusts to its new equilibrium.

d. The number of film production lines increases, and at the same time, people switch to digital cameras. How do these events influence demand and supply? Do they create a shortage or a surplus at the equilibrium price in part a? Describe how the price and quantity change.

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