University:
Minnesota State University Moorhead
Course:
ECON-302 | Intermediate Microeconomic Theory
Academic year:

2020
Views:

183

Pages:

2
Author:

Alessandro Nelson

EQUILIBRIUM, SURPLUS & SHORTAGE Combining Supply and Demand Scenario: The following shows a demand and supply schedule listing CDs demanded and supplied (in the millions) per week at each price. • Graph each the following demand/supply schedule on one demand graph and then answer the questions below: Price Per Compact Disc 6 5 4 3 2 1 1. 2. 3. 4. 5. 6. Quantity Demanded Quantity Supplied 0 2 3 4 6 9 9 6 5 4 3 0 Shortage/ Surplus (QS – QD) 9 4 2 0 -3 -9 What is the equilibrium price? 3 pesos What is the QD and QS at the equilibrium price? What is the surplus at Php. 6? 9 What is the shortage at Php. 2 3 How does a surplus affect the price of a product? How does a shortage affect the price of a product? 4 increases decreases Changes in Demand Scenario: The following schedule shows a change in demand based on the price of a related product. The demand increased for CDs because the price of CD players dropped. Price Per Compact Disc Quantity Demanded (CD Players Php. 75) Quantity Demanded (CD Players Php. 50) Quantity Supplied Shortage or Surplus (QS new QD) 6 0 4 9 5 5 2 6 6 0 4 3 7 5 -2 3 4 8 4 -4 2 6 11 3 -8 1 9 13 0 -13 1. 2. 3. 4. 5. What happened to the original demand curve? shifted right How was the equilibrium point affected? increased by 2 What is the surplus at $6.00? 5 What is the shortage at $2.00? 8 How did this scenario benefit the supplier of CDs? It caused the price to increase Changes in Supply Scenario: The following schedule shows a change in supply based on new technology and methods of producing CDs. The supply increased for CDs because the new technology allowed the supplier to produce CDs at a reduced rate. Price Per Compact Disc Quantity Demanded Quantity Supplied (old technology) Quantity Supplied (new technology) Shortage/ Surplus (New QS minus QD) 6 5 0 2 9 6 14 12 14 4 3 2 1 3 4 6 9 5 4 3 0 10 8 6 3 7 1. 2. 3. 4. 5. 10 4 0 -6 What happened to the original supply curve? shifted right How was the equilibrium point affected? increased by 2 What is the surplus at Php. 6.00? 14 Why is there no longer a shortage at Php. 2.00? Made the same number of CDs as what the market demanded How did this scenario benefit the consumers of CDs? _It increased causing them to be sold more Changes in Supply and Demand Scenario: The following schedule shows a change in supply and demand simultaneously for CDs. Price Per Compact Disc Quantity Demanded (CD Players $75) Quantity Demanded (CD Players $50) Quantity Supplied (old technology) Quantity Supplied (new technology) 6 5 4 3 2 1 0 2 3 4 6 9 4 6 7 8 11 13 9 6 5 4 3 0 14 12 10 8 6 3 1. How was the equilibrium point affected? It went from 4 to 6 then 6 to 8 2. What would happen to the price of CD’s if an alternative product, such as the iPod, became popular and shifted the demand curve back to D1? (all things remaining the same) The price would decrease 3. What would happen to the price of CD’s if an input for creating cd increased and shifted the supply curve back to S1? (all things remaining the same) The price would increase

Equilibrium, Surplus, Shortage Worksheet

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