Suppose the government mandates that the total number of mobile phones produced be no less than 45 million. The black line on the following graph shows the production restriction of 45 million phones. (?) 200 Demand Wasted Resources 160 140 120 100 PRICE (Dollars per phone) 40 Supply 5 10 15 20 25 30 35 40 45 50 QUANTITY (Millions of mobile phones) The minimum price producers are willing to sell the 45 millionth phone for is _. For that 45 millionth phone, buyers are willing to pay_ Therefore, producing and selling that 45 millionth phone wastes resources worth _. On the preceding graph, use the black triangle (plus symb unexploited gains lea representing total wasted resources due to the government regulation. wasted resources At any quantity below the equilibrium quantity, there are . Similarly, at any quantity above the equilibrium quantity, there are3. Unexploited gains and wasted resources The following graph shows the supply of (orange curve) and demand for (blue curve) mobile phones. Determine the equilibrium price and quantity of mobile phones. Based on this, use the green triangle (triangle symbols) to shade the area representing consumer surplus at the equilibrium price. Then use the purple triangle (diamond symbols) to shade the area representing producer surplus at the equilibrium price. 200 180 Demand Consumer Surplus 140 120 Producer Surplus 100 PRICE (Dollars per phone) Supply 5 10 15 20 25 30 35 40 45 60 QUANTITY (Millions of mobile phones) Total surplus in this market is $ million.2. Equilibrium price and quantity - An algebraic approach Suppose the annual supply of a good is given by the equation Qs = -6 + 2P and the demand for the good is given by the equation 2p =14-2P, where quantity (Q) is measured in millions of units per year and price (P) is measured in dollars per unit. The equilibrium quantity in this market is units per year and the equilibrium price is S the following graph, plot the demand curve using the blue line (circle symbol) and plot the supply curve using the orange line (square symbol). Then place the black point (plus symbol) at the equilibrium price and quantity. Note: Dashed drop lines will automatically extend to both axes. (?) O Demand Supply PRICE (Dollars per unit) Equilibrium N QUANTITY (Millions of units per year) increased decreased Now suppose a change in con s results in a new demand curve given by the equation Qp =10 -2P. Given this equation, the change in consumer tastes must have demand. The new equilibrium quantity in this market is units per year, and the equilibrium price is per unit.1. Market equilibrium with demand and supply functions Consider the market for snow shovels. Suppose the quantity of snow shovels demanded by consumers (Q)") depends on the price of an snow shovel ( P) and the percentage chance of snow (C) forecasted by the local news station. Similarly, the quantity of snow shovels supplied by producers (QS) depends on the price of an snow shovel (P) and the square-yard price of wood (W) used in the production of snow shovels. The numerical formula for the quantity of snow shovels demanded and supplied is as follows: Q" = 6-P+0.20 0" = 8+P-6W Which of the following variables are endogenous in the supply and demand model? (Hint: "Exogenous" variables are those whose values are determined within their models while "exogenous" variables are set outside the models.) Check all that apply. O Chance of snow 0 Equilibrium quantity of snow shovels O Price of a snow shovel Which of the following formulas correctly states the demand for snow shovels in functional form? O Q" = D (P, C) O P = D (Q", C) O C =D (P,Q")In the following graph, use the blue points (circle symbol) to draw the market demand curve if the weather forecast says the chance of snow is 70%. (Note: Do not convert the percentage to a decimal when plugging this value into the demand curve formula.) Then use the orange points (square symbol) to draw the market supply curve if the current cost of wood is $2 per yard. Finally, use the black point (plus symbol) to indicate the equilibrium price and quantity in the market for snow shovels. 20 O 18 Te Demand 14 12 Supply 10 PRICE (Dollars per snow shovel) Equilibrium 10 12 14 16 18 20 QUANTITY (Snow shovels)