The weekly demand and supply schedules for red dresses (in millions) in a free market are as

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The weekly demand and supply schedules for red dresses (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 is the equilibrium price and quantity? 


(b) If there is a change in fashion that causes demand for red dresses to rise by 4 million at each price, what will be the new equilibrium? Has the equilibrium quantity risen by as much as the increase in demand? Explain why or why not.


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Essential Economics For Business

ISBN: 9781292728940

7th Edition

Authors: John Sloman, Elizabeth Jones

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