The demand and supply curves for T-shirts in LA, Ca, are given by the following equations:

Q= 24,000 - 500P Q= 6,000 + 1,000P

where P is measured in $ and Q is the number of T-shirts sold per year.

a. Find the equilibrium price and quantity algebraically.

b. If the tourists decide they do not really like T-shirts that much, which of the following might be the new demand curve?

Q=21,000 - 500P Q=27,000 - 500P

Find the equilibrium price and quantity after the shift of the demand curve.

c. If, instead, 2 new stores that sell T-shirts open up in town, which of the following might be the new supply curve?

Q=4,000 + 1,000P Q=9,000 + 1,000P

Find the equilibrium price and quantity after the shift of the supply curve.

In addition,

Assume both b. and c. happen causing both the demand and supply curves to shift. Find the new equilibrium price and quantity after both shifts

Solution Preview

Dear Student,

a. Equilibrium price.

Demand Curve is= 24000 - 500P and supply Curve is Q= 6000 +1000P that means using simple algebraic equations, 1500P = 18000. That means P= 12.The equilibrium price = 12. And quantity = 24000-500*12 = 18000. So equilibrium price = 12 and quantity = 18,000/-.

... the quantity demanded while an increase in price increases the quantity demanded. ... upon concepts of shifts and movement along the demand and supply curves. ...

... That is, both demand curves shift to the right (blue line ... For the first graph, with the relatively elastic supply curve, the price increase (P2 for both graphs ...

... 125) + (0.01*35,000) + (750*0) Demand curve = 1,500 100P. ... equation, we get Quantity demanded = 1,400 (100 ... the sum total of both companies supply curves. ...

... c) Plot the supply and demand curves. D) What is the equilibrium price/output level? e) Suppose demand increases and leads to a new demand curve: Qd=3,500 ...

... deal with key issues in economics: demand curve, supply curve etc. ... TUTORIAL A. Price elasticity of demand is a ... between price and the quantity demanded of a ...

... in the income of the people demanding the good ... very difficult to estimate the market demand.(2) In ... several factors that change the position of the supply curve. ...

... change in quantity demanded = (480.7 480 ... 100 = 1% Income elasticity of demand = 0.146%/1% = 14.58% 4. The demand function and supply curve, for the ...

... since the drastic reduction in quantity demanded will mean ... have an understanding of consumer demand for their ... their own cost structure and supply curve will be ...