Consider the market for pizza. Suppose that the market demand for pizza is given by the equation Qd = 300 - 20Pd and the market supply for pizza is given by the equation Qs = 20Ps - 100, Qd = quantity demanded, Qs = quantity supplied, Pd = price consumers pay (per pizza).

a. Graph the supply and demand schedules for pizza using $5 through $15 as the values of Pd and Ps.

b. In equilibrium. How many pizzas would be sold and at what price?

c. What would happen if suppliers set the price of pizza at $15? Explain the market adjustment process.

d. Suppose that the price of hamburgers, a substitute for pizza, doubles. Assume that this leads to a doubling of the demand for pizza (that is, at each price consumers demand twice as much pizza as before). Write the equation for the new market demand for pizza.

e. Find the new equilibrium price and quantity of pizza.

Solution Preview

To create a graph, we first need to chart the quantities that will result from each price for demand:

...Graph the supply and demand schedule for pizza using $5 through $15 as the value of p. In equilibrium, how many pizzas would be sold at what price? ...

... X bar chart, R chart, c chart, Demand, Present Value ... costs are the same Answer: level of demand= 32,000. 5 The local convenience store makes personal pan pizzas. ...

... 5. Why not consume 10 pizzas and 5 cases of beer? ... of the demand curve is shown in the chart; its slope ... a fall in quantity demanded (the Law of Demand); we want ...

... Refer to the graph. ... If pizzas and quesadillas are substitutes, and the price of pizzas decreases, then we would expect ... a decrease in the demand for quesadillas ...

... a) Determine the demand functions for pizza and beer (mathematically ... How many pizzas and how many beers are consumed in equilibrium for each ... (Sketch the graph). ...

...demand curve for labor is simply the graph of the ... Higher competition will cause the equilibrium of pizza to decrease. ... e no effect on the demand curve (it will ...

The Market for Pizza has the following demand and supply schedules: ...pizzas $8 53 pizzas 110 pizzas $9 39 pizzas 121 pizzas. ... A. Graph the demand and supply curves ...

... (4) In the interactive graph move the ... Therefore, in choosing to consume 300,000 pizzas instead of 200,000, you weren't able to ... (4) Moving the demand curve one ...

... c. the marginal utility of the second slice of pizza is 20. 30. Refer to the graph. ... This is the price given by the intersection of the ATC and demand curves. ...