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    Assume your product is Wendy's hamburgers. First "draw" the demand and suppy curve and see how the equilibrium price and quantity is determeined.

    Second, change something on the demand or supply side, i.e increase or decrease one of the determinants of demand ( or supply). Write a short description of what you changed and how it should affect the equilibrium price or quantity. Did teh equilibrim price and quantity do what you expected? Why or why not?

    © BrainMass Inc. brainmass.com September 29, 2022, 1:36 pm ad1c9bdddf
    https://brainmass.com/economics/demand-supply/initial-equilibrium-supply-demand-350906

    SOLUTION This solution is FREE courtesy of BrainMass!

    The initial equilibrium is shown by the black demand and supply curves. The intersection point gives the equilibrium price P1 and the equilibrium quantity Q1.
    Now suppose the population of the town where Wendy's is located increases. More people will mean more consumers and hence the demand for hamburgers will rise. This will mean that for every price the consumers are willing to buy more hamburgers. That applies to all prices, not only to the equilibrium price. Hence the demand curve will shift to the right.
    This is shown by the new demand curve in red above (denoted Final Demand), and the intersection point will move in the north-east corner. The new equilibrium has a price of P2 and quantity of Q2. The new equilibrium price is above the original equilibrium price, and the new equilibrium quantity is above the old equilibrium quantity.
    This is what we would expect to happen. When people are willing to buy more goods it will mean firms will sell more, and since more people want to buy goods (or people want more goods, the two are equivalent for the firms) they will be willing to pay more to get the goods. Thus we would expect market price and quantity to rise, and this is what we see here.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    © BrainMass Inc. brainmass.com September 29, 2022, 1:36 pm ad1c9bdddf>
    https://brainmass.com/economics/demand-supply/initial-equilibrium-supply-demand-350906

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