Foe each of the following pairs of products, state which are complements, which
ID: 1220921 • Letter: F
Question
Foe each of the following pairs of products, state which are complements, which are substitutes, and which are unrelated. Digital camera and memory stick 7Up and Mountain Dew Swimsuits and flip-flops Tylenol and cat food Photocopier and paper Refer to figure above. At what price is there a shortage of 600 units? At a price of dollar 15, how many units will be sold? If the current market price dollar 15, what must happen to that price to achieve equilibrium? At a price of dollar 25, how many units will he supplied? At a price of dollar 25, how many units will be sold? Refer to table above. The table contains information about the corn market. Use the table to answer the following questions. What are the equilibrium price and quantity of corn? Suppose the prevailing price is dollar 9 per bushel. Is there a shortage or a surplus in the market? What is the quantity of the shortage or surplus? How many bushels will be sold if the market price is dollar 9 per bushel? If the market price is dollar 9 per bushel, what must happen to restore equilibrium in the market? At what price will suppliers be able to sell 22, 000 bushels of corn? Suppose the market price is dollar 21 per bushel. Is there a shortage or a surplus in the market? What is the quantity of the shortage or surplus? How many bushels will be sold if the market price is dollar 21 per bushel? If the market price is dollar 21 per bushel, what must happen to restore equilibrium in the market?Explanation / Answer
1.a) Digital Camara and memory stick are complements because the sale of memory sticks are depend on the sale of digital camara.
b. 7Up and mountain dew are substitute good, because if the price of 7up rises then the demand for mountain dew will rise.
c. Swimsuits and flip flops are unrelated.
d. Tylenol and cat food are unrelated goods.
e. Photocopier and paper are complement goods.
2(a). At price $10 supply is 200 units and demand is 800 units.So there is a shortage of 600 units.
b. At a price of $15 units sold were 400 units because supplier will not produce more than that amount at that price.
c. If the market price is $15 then to achieve equilibrium demand curve has to shift downward to the point where price is $15.
d. At a price of $25 producer will supply 800 units as they receive high price.
e. At a price of $25 units sold were 500 units as that is the quantity demanded by the buyers.
3(a). As we know equilibrium will occur where demand = supply. Here at price $15 quantity demanded is equals to quantity supplied i.e 15,000 units of bushels. So equilibrium price is $15 and quantity is 15,000 bushels.
b. Suppose the price is $9 then there will be a shortage because quantity demanded is greater than quantity supplied.
c. At price $9 the amount of shortage is (22,000 - 9,000) = 13,000.
d. At price $9 quantity supplied is 9,000 because producer will not produce more at this lower price.So quantity sold at this price is 9,000 bushels.
e. To restore the equilibrium at $9, demand curve has to shift downward untill quantity demande equals to quantity supplied i e. demand curve will shift untill it reaches 9,000 units of bushels.
f. At price $18, suppliers will be able to sell 22,000 units.
g. At price $21 per bushels there will be a surplus because supply is more than demand.
h. There will be a surplus of (28,000 - 8,000) = 20,000 units of bushels.
i. 8,000 units of bushels will be sold when price is $21 per unit of bushel.
j. To restore the equilibrium at price $21, supply curve has to shift upward untill quantity supplied equals quantity demanded i.t. at point where quantity demanded is 8,000 units of bushels.