Answer to Question #264870 in Statistics and Probability for terek

Question

Price (cents) Quantity of Cookies Demanded Quantity of Cookies Supplied

0.70 10 200

0.60 20 180

0.50 40 160

0.40 70 140

0.30 110 110

0.20 160 70

0.10 240 10

a.      If the quantity demanded increases by 70 cookies at every price, what is the equilibrium price?__________                                                                                            

b.      If the quantity demanded increases by 70 cookies at every price, what is the equilibrium quantity? __________                                                    

Answer 1

When the quantity demanded increases by 70 cookies at every price , the changes in prices are as follows.

Price (cents) Quantity of Cookies Demanded Quantity of Cookies Supplied

0.70 80 200

0.60 90 180

0.50 110 160

0.40 140 140

0.30 180 110

0.20 230 70

0.10 310 10

At equilibrium, Quantity of Cookies Demanded is equal to the Quantity of Cookies Supplied. In the table above, this condition holds when the quantity of cookies demanded is 140 and the Quantity of Cookies Supplied is 140.

Therefore, the equilibrium price is 0.40 and the equilibrium quantity is 140.