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Shifts in supply and demand

3. Given the following data, identify the amount of shortage or surplus that would exist at a price of

(a) $5.00 _____________
(b) $3.00 _____________
(c) $1.00 _____________

A. Price $5.00 $4.00 $3.00 $2.00 $1.00 $5.00 $4.00 $3.00 $2.00 $1.00
B. Quantity demanded C. Quantity supplied

Al 1 2 3 4 5 Alice 3 3 3 3 3
Betsy 0 1 1 1 2 Butch 7 5 4 4 2
Casey 2 2 3 3 4 Connie 6 4 3 3 1
Daisy 1 3 4 4 6 Dutch 6 5 4 3 0
Eddie 1 2 2 3 5 Ellen 4 2 2 2 1
Market total __ __ __ __ __ Market total __ __ __ __ __

6. In Figure 3.8 how many more people would live if the prohibition on selling human organs
were lifted?

7. In Figure 3.8, when a price prohibition is imposed on the organ market by how much does

(a) The quantity of organs demanded increase?
(b) The quantity of organs supplied decrease?
(c) How large is the resulting shortage?

8. Illustrate on the graphs below:
(a) The rise in the price of gasoline.
(b) The change in the quantity of gasoline demanded.
(c) The new equilibrium in the bus market.
(d) What determinant of bus demand changed?

9. Use the following data to draw supply and demand curves on a graph, use Excel.

Price $ 8 7 6 5 4 3 2 1
Quantity demanded 2 3 4 5 6 7 8 9
Quantity supplied 10 9 8 7 6 5 4 3

(a) What is the equilibrium price?
(b) If a minimum price (price floor) of $6 is set, what disequilibrium results?
(c) If a maximum price (price ceiling) of $3 is set, what disequilibrium results?

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Solution Preview

At $5, we can see the total demanded would be 5 (adding Al, Betsy, Casey, Daisy, and Eddie's values) and that the total supplied by the sellers would be 26. This means that there would be a surplus of 21. At $3, the same process would give us 13 supplied and 16 demanded which gives us a shortage of 3. At $1, there are only 7 supplied while 22 are demanded, giving us a shortage of 15.

In figure 3.8, we take the difference between the market equilibrium quantity of organs, qe, and subtract from it the ...

Solution Summary

A discussion of market equilibrium in organ transplant market is provided.

$2.19