Question

1. The demand and supply schedules for hot dogs are:

Price	Quantity demanded (millions per week)	Quantity supplied (millions per week)
40	170	90
50	160	100
60	150	110
70	140	120
80	130	130
90	120	140
100	110	150
110	100	160

a. What are the equilibrium price and equilibrium quantity of hot dogs?

b. If the price for hot dogs were 90 cents, describe the situation in the market for hot dogs and explain what would happen next in the market.

c. Assume a new breed of “lipless” pigs is bred, resulting in a decrease in supply of 40 million hot dogs per week. What is the new equilibrium price and quantity in the market?

d. Assume that, at the same time that part c. occurs, a Canadian news magazine prints a story regarding the cancer-reducing effects of hot dog consumption. The result is an increase to demand of 20 million hot dogs per week. What is the new equilibrium price and quantity in the market?

Answer 1

1. What are the equilibrium price and equilibrium quantity of hot dogs?

Answer:- The equilibrium price :- 80

The equilibrium quantity of hot dogs:- 130

1. If the price for hot dogs were 90 cents, describe the situation in the market for hot dogs and explain what would happen next in the market.

When the price is 90 cents, supply of hot dogs will be 140 and quantity demanded is 120 thus there is a surplus of hotdogs of 140-120 =20 hot dogs in the market and thus the price will reduce.

1. Assume a new breed of “lipless” pigs is bred, resulting in a decrease in supply of 40 million hot dogs per week. What is the new equilibrium price and quantity in the market?

Price	Quantity demanded (millions per week)	New Quantity supplied (millions per week)
40	170	90-40 =50
50	160	100-40=60
60	150	110-40=70
70	140	120-40=80
80	130	130-40=90
90	120	140-40=100
100	110	150-40=110
110	100	160-40=120

The new equilibrium quantity will be 110 units and price will be 100 cents.

Assume that, at the same time that part c. occurs, a Canadian news magazine prints a story regarding the cancer-reducing effects of hot dog consumption. The result is an increase to demand of 20 million hot dogs per week. What is the new equilibrium price and quantity in the market?

Price	Quantity demanded (millions per week)	New Quantity supplied (millions per week)
40	170+20 =190	90-40 =50
50	160+20 =180	100-40=60
60	150+20 =170	110-40=70
70	140+20 =160	120-40=80
80	130+20 =150	130-40=90
90	120+20 =140	140-40=100
100	110+20 =130	150-40=110
110	100+20 =120	160-40=120

The new equilibrium quantity will be 120 units and price will be 110 cents

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