Financial Problems
a. The market equilibrium price is $6.

b. Quantity supplied would be 10, but quantity demanded would be 20. This would result in a shortage equal to the area under the equilibrium point bounded by the supply and demand curves to the $2 level.

c. Quantity supplied would be 20, but the quantity demanded would be 10. This would result in a surplus equal to the area above the equilibrium point bounded by the supply and demand curves to the $8 level.

d. If prices changed and people wanted to buy twice as much as before, the following chart shows the result and the new equilibrium price of $8.

e. If there is a change in technology which lowers the suppliers' costs, the equilibrium price will fall as the suppliers are willing to supply more units at each price on the curve. The exact equilibrium point will be determined by the magnitude of the savings to the suppliers. Of course, some suppliers may be willing to charge higher prices in the short-term to realize greater profits from the technological shift, but the price will fall in the long-term due to competitive pressure.

a. If the price of steak increases, the equilibrium price and quantity of hamburgers is likely to increase as well since consumers will be willing to spend more on a hamburger (although less than the price increase for steaks).

b. If the price of french fries increases, the quantity demanded for hamburgers will decrease because the total cost of the combination increases. However

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demand for transportation is relatively inelastic; people need to get to their jobs and school. But their demand for a specific type of transportation can be elastic. When a recession occurs, people are interested in obtaining transportation at a low cost because they are unsure of their economic future. This pushes up sales of used cars. New cars, which are more expensive are in less demand because they cost more. 6-9 Consumers will pay more of the tax than suppliers. This is because the supply curve shifts upwards resulting in a higher price for the good at only a slightly reduced quantity supplied. In the following diagram, the small gap between the two lower dotted lines crossing the price axis is the increase to the seller; the gap between the two top dotted lines is the increase to the buyer. 9-1 If I keep the car for one year, it costs me the interest that I could have earned on the $8,000 difference between the value of the car today and the value of the car one year from now, plus the $8000 itself since I would still have that in a year if I sell the car. Since interest rates are forecast at 10 percent, the interest cost to me is $800. Of course, by using the car I am gaining the benefit of havi
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Some common words found in the essay are:
, ATC AVC, equilibrium price, supply curve, quantity supplied, quantity demanded, atc avc, willing charge, bounded supply demand, quantity supplied decrease, equilibrium price rise, costs equilibrium, consumers willing, equal equilibrium bounded, market share, economic profits, equilibrium bounded supply,
Approximate Word count = 1229
Approximate Pages = 5 (250 words per page)