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/-.

... 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 ...

Demand and Supply Curves, etc. ... examples of how the determinants of demand and supply affect this ... 3. What happens to the demand curve and the supply curve when ...

... 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 ...

... The quantity demanded at each price is the same as before the supply shift (at both Q0 and Q1).Where it cuts the demand curve, it gives the new equilibrium ...

...Supply factor pushes the decrease in prices of curve shifts towards prices downwards a substitute. Demand left. and supply factor curves shifts towards pushes ...

... Similarly, a shift in the supply curve indicates that some other factor (or factors) that affect ... Thus, a shift in the demand and supply curves has occurred ...