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Equilibrium Graph Use the below supply and demand schedules to graph an equilibrium graph. Price ($) Quantity Supplied Quantity Demanded $10 100 300 $20 150
- Equilibrium Graph
- Use the below supply and demand schedules to graph an equilibrium graph.
Price ($) | Quantity Supplied | Quantity Demanded |
$10 | 100 | 300 |
$20 | 150 | 250 |
$30 | 200 | 200 |
$40 | 250 | 150 |
$50 | 300 | 100 |
- Label the original supply line as S1 and the original demand line as D1.
- Calculate the equilibrium price and quantity by finding the point where the supply and demand curves intersect. Label this point on your graph as "E1."
- Off to the side, write out the equilibrium price and quantity.
- Suppose there is an increase in consumer income. Show the effect on the demand curve by creating a new demand line. Label the new line D2.
- Suppose there is a decrease in production costs. Show the effect on the supply curve by creating a new supply line. Label the new line S2.
- Identify the new equilibrium point and label it as E2.
- Off to the side, write out the new equilibrium price and quantity.
Part Two
- Why is the knowledge of equilibrium important in a market economy?
- Discuss the role of supply, demand, and equilibrium in determining prices and allocating resources efficiently.
- Explain why the curve shifts in the direction it does for the scenario listed in 1E above (increase in consumer income).
- What happens to the equilibrium price and quantity in the 1E scenario?
- Explain why the curve shifts in the direction it does for the scenario listed in 1F above (decrease in production cost).
- What happens to the equilibrium price and quantity in the 1F scenario?
- Suppose the government intervened and set a price ceiling of $25. List the quantity demanded and supplied, if there is a shortage or surplus created, how much of one, and the consequences for both consumer and producer.
- Suppose the government intervened and set a price floor of $40. List the quantity demanded and supplied, if there is a shortage or surplus created, how much of one, and the consequences for both consumer and producer.
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