The weekly demand and supply schedules for t-shirts (in millions) in a free market are as follows:
Question:
The weekly demand and supply schedules for t-shirts (in millions) in a free market are as follows:
Price (£) | 8 | 7 | 6 | 5 | 4 | 3 | 2 | 1 |
Quantity demanded | 6 | 8 | 10 | 12 | 14 | 16 | 18 | 20 |
Quantity supplied | 18 | 16 | 14 | 12 | 10 | 8 | 6 | 4 |
(a) What are the equilibrium price and quantity?
(b) Assume that changes in fashion cause the demand for t-shirts to rise by 4 million at each price. What will be the new equilibrium price and quantity? Has equilibrium quantity risen as much as the rise in demand? Explain why or why not.
(c) Now plot the data in the table and mark the equilibrium. Also plot the new data corresponding to (b).
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a Equilibrium is where quantity demanded equals quantity supplied P 5 Q ...View the full answer
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