Chapter 3: Q. 12 (page 78)
What determines the level of prices in a market?
Market demand and market supply.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
Table 3.10 shows the supply and demand for movie tickets in a city. Graph demand and supply and identify the equilibrium. Then calculate in a table and graph the effect of the following two changes.
(a) Three new nightclubs open. They offer decent bands and have no cover charge, but make their money by selling food and drink. As a result, demand for movie tickets falls by six units at every price.
(b) The city eliminates a tax that it placed on all local entertainment businesses. The result is that the quantity supplied of movies at any given price increases by .
| Price per pound | Qd | Qs |
|---|---|---|
| \(5.00 | 26 | 16 |
| \)6.00 | 24 | 18 |
| \(7.00 | 22 | 20 |
| \)8.00 | 21 | 21 |
| $9.00 | 20 | 22 |
Suppose both of these events took place at the same time. Combine your analyses of the impacts of the iPod and the tariff reduction to determine the likely impact on the equilibrium price and quantity of Sony Walkman-type products. Show your answer graphically.
Does a price ceiling change the equilibrium price?
How does a price floor set above the equilibrium
level affect quantity demanded and quantity supplied?
What is consumer surplus? How is it illustrated on
a demand and supply diagram?
What do you think about this solution?
We value your feedback to improve our textbook solutions.
