Question

In fig 3-7, what are the effects of a price increase from \(2 per portable power bank to \)4 per portable power bank on the quantities supplied by supplier 1 and by supplier 2 individually and combined?

Short answer

Increases from 1: 25 to 40 and 2: 15 to 30

Combined: 40 to 70.

Step-by-step solution

Step1. Introduction

Given it is that $4 is the new price of the initially price $2 portable power bank.

Step2. Explanation

As price rises to $4 from $2, suppliers will supply more quantity of goods because they want to make the best of the price rise and sell off their goods at this increased price. This is also explained and observed through the law of supply. Supplier one shall supply 40 instead of 25 power banks and Supplier two shall supply 30 instead of 15 power banks as according to the supply schedule given.

The combined supply at $4 is 70 units instead of 40 units earlier at $2. (given in supply schedule).