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Social Science Clinic => Economics => Topic started by: krabuske on Nov 23, 2022

Title: Shifts in the Supply CurveThe table shows the quantity of tablets that is demanded and supplied at ...
Post by: krabuske on Nov 23, 2022

Question 1

The Supply Curve

The table shows the supply schedule for socks.

Price	Quantity Supplied
1	0
2	15​
3	30​
4	45​
5	60​

Assuming that the supply of socks is linear, at what price is a quantity of 39 supplied? Round your final answer to two decimal places.
◦ $12.40
◦ $3.60
◦ -$585.00
◦ $585.00

Question 2

Shifts in the Supply Curve

The table shows the quantity of tablets that is demanded and supplied at various prices.

Price	Quantity Demanded	Quantity Supplied
50	120,000​	100,000​
75	112,500​	102,500​
100	105,000​	105,000​
125	97,500​	107,500​

Assume that the new equilibrium price is $50. How much would quantity supplied need to increase at each price to reach this equilibrium?
◦ 5050
◦ 2550
◦ 20,000
◦ 112,499

Title: Shifts in the Supply CurveThe table shows the quantity of tablets that is demanded and supplied at ...
Post by: KobyRhoads on Nov 23, 2022

Answer 1

$3.60

To find the price for any given quantity supplied, you first need to determine the equation of the supply curve: Y = a + bX, or P = a + bQ where a is the Y-intercept and b is the slope.

If the supply of socks is linear, then the slope is constant. Slope equals the change in price divided by the change in quantity.
Slope (between Price=$1 and Price=$2) = (2-1) / (15-0) = 1/15

Then, find the Y-intercept by plugging in a point on the table: P=$1 and Q=0
P = a + 1/15 * Q
1 = a + 1/15 * (0)
1 = a
a = 1
So the equation of the demand curve is P = 1 + 1/15*Q

Therefore, when Q = 39
P = 1 +39/15 = 3.60

Answer 2

20,000

To find the amount quantity supplied needs to increase at each price to reach equilibrium, you first need to determine the equation of the supply and demand curves.

Demand Curve: P = a + b*Q
Slope (b) = change in P/change in Q = (75-50)/(112,500-120,000) = -0.00333333
Determine the Y-intercept by plugging in a point on the demand curve
P = a - 0.00333333*Q
50 = a - 0.00333333*120,000
50 + 0.00333333*120,000 = a
a = 450
So the equation of the demand curve is P = 450 +-0.00333333*Q or  Q = (P - 450)/-0.00333333

Supply Curve: P = a + b*Q
Slope (b) = change in P/change in Q = (75-50)/(102,500-100,000) = 0.01
Determine the Y-Intercept by plugging in a point on the supply curve
P = a + 0.01*Q
50 = a + 0.01*100,000
50 - 0.01*100,000 = a
a = -950
So the equation of the supply curve is P = -950 + 0.01*Q

If the new equilibrium price is $50, then at this price quantity demanded equals the new quantity supplied.
First, determine the quantity demanded at this price.
Q = (P - 450)/-0.00333333 = (50 - 450)/-0.00333333 = 120,000
Therefore, quantity supplied equals 120,000.

At a price of $50, the original quantity supplied was 100,000. To get to the new equilibrium quantity, 120,000, supply needs to increase by 120,000-100,000 = 20,000