Draw a completely labeled supply and demand graph. Show the equilibrium point, the equilibrium price and...

Draw a completely labeled supply and demand graph. Show the equilibrium point, the equilibrium price and quantity show using the diagram and explain in words, why a price above the equilibrium price would fall given a free market process and the same for a price below the equilibrium price.

Expert Solution

In following graph, price (P) and quantity (Q) are depicted vertically & horizontally respectively.

D0 & S0 are initial demand & supply curves, intersecting at point A with equilibrium price P0 & quantity Q0.

If market price is higher at Pf, quantity demanded decreases to Q1 and quantity supplied increases to Q2, causing a surplus of (Q2 - Q1). Therefore, firms agree to accept lower and lower price to increase quantity sold, so price starts falling until it reaches P0 and equilibrium is restored.

If market price is lower at Pc, quantity demanded increases to Q4 and quantity supplied decreases to Q3, causing a surplus of (Q2 - Q1). Therefore, firms agrees to accept lower and lower price to increase quantity sold, so price starts falling until it reaches P0 and equilibrium is restored.

If market price is higher at Pf, quantity demanded decreases to Q1 and quantity supplied increases to Q2, causing a shortage of (Q4 - Q3). Therefore, consumers agree to offer higher and higher price to increase quantity sold by sellers, so price starts rising until it reaches P0 and equilibrium is restored.

Rahul Sunny answered 8 months ago

3. Draw completely labeled Supply or Demand graphs. Draw a separate graph for each question. Answer...

3. Draw completely labeled Supply or Demand graphs. Draw a separate graph for each question. Answer the following questions by showing which way which curve moves: a. What happens to YOUR demand curve for macaroni and cheese after you graduate and get a better paying job? b. When the price of olive oil goes up, what probably happens to the demand for corn oil? c. When the price of petroleum goes up, what probably happens to the demand for natural...

Given a scenario, draw a supply/demand graph, beginning with a market in equilibrium, and show the...

Given a scenario, draw a supply/demand graph, beginning with a market in equilibrium, and show the effect of changes in both a determinant of supply and a determinant of demand.

on a graph, draw the supply and demand curves for juul pods, labeling the equilibrium price...

on a graph, draw the supply and demand curves for juul pods, labeling the equilibrium price and quantity(1 point). Now suppose the government imposes a per unit tax to be paid by sellers. on the same graph, show how this affects the supply and or demand curves and show the new equilibrium price and quantity ( 2 points ). label the price suppliers recieve, the price buyers pay, and the tax ( 2 points). label the areas of consumer surplus,...

Part 1: Draw a loanable funds graph in initial equilibrium (show demand and supply intersecting then...

Part 1: Draw a loanable funds graph in initial equilibrium (show demand and supply intersecting then trace out an equilibrium interest rate and quantity of loanable funds). Clearly label all the parts of the graph. We’ll assume that the demand for loanable funds comes from investment demand and from government budget deficits, and that the supply of funds come from private and foreign savings. (Grade criteria—correct labeling) Part 2: Suppose that due to the expectation of a slowdown in the...

Draw a properly labeled labor supply and demand graph above the aggregate production graph. Indicate with...

Draw a properly labeled labor supply and demand graph above the aggregate production graph. Indicate with a proper curve shift an increase in capital and or technology. What does this do to equilibrium wage, number of workers, total ouput, productivity, and standard of living?

Draw a graph to show the effect on the equilibrium price and quantity of hamburgers if...

Draw a graph to show the effect on the equilibrium price and quantity of hamburgers if (a) the price of hot dogs increases (b) a new breed of cattle is developed with much faster growth (c) research proves that this new breed results in hamburgers with more cholesterol (d) the wages of workers who process the hamburgers patties increase

Draw a graph for the Supply and Demand for Money. Show (and explain) how a central...

Draw a graph for the Supply and Demand for Money. Show (and explain) how a central bank could increase the equilibrium interest rate.

Draw a supply and demand diagram with a perfectly elastic Supply. a- Determine the equilibrium price...

Draw a supply and demand diagram with a perfectly elastic Supply. a- Determine the equilibrium price and quantity on your graph. Label the relevant area of the graph with letters and determine consumer surplus, producer surplus and total surplus of the market at the equilibrium. b- Show that any deviation from the equilibrium results in a decrease in total surplus. c- Show the change in consumers, producers, and total surplus of the market as a result of an upward shift...

Draw a supply and demand model in equilibrium in Q=50 and P=$3. label the equilibrium point...

Draw a supply and demand model in equilibrium in Q*=50 and P*=$3. label the equilibrium point E. Impose a price floor of $4 per unit in the market. Indicate on the graph where new levels of supply and demand expressed. Illustrate how this price floor create a surplus in the market.

Draw and explain the three ranges on the aggregate demand and supply graph. Show in separate...

Draw and explain the three ranges on the aggregate demand and supply graph. Show in separate graph what happens to the aggregate supply curve when the price of oil increases.

Question