Question

please answer the question c-f

Q2 The demand and supply schedules for potato chips are in the table. 50 70 80 a) Draw a graph of the potato chip market and mark in the equilibrium price and quantity. Quantity Quantity Price demanded supplied b) If the price is 60¢ a bag, is there a shortage or a (cents per bag) (millions of bags a week) surplus, and how does the price adjust? 160 130 c) A new dip increases the quantity of potato chips 60 150 140 that people want to buy by 30 million bags per 140 150 week at each price. Does the demand for chips 130 160 change? Does the supply of chips change? 90 120 170 Describe the change. 100 110 180 d) Following c), how do the equilibrium price and equilibrium quantity of chips change? e) Following part a) and b), f a virus destroys potato crops and the quantity of potato chips produced decreases by 40 million bags a week at each price, how does the supply of chips change? f) If the virus in part e) hits just as the new dip in part c) comes onto the market, how do the equilibrium price and equilibrium quantity of chips change?

Answer 1

C) demand Curve will shift to right by 30 at each price

No effect on supply Curve

So new demand schedule

P	Qd	Qs
50	190	130
60	180	140
70	170	150
80	160	160
90	150	170
100	140	180

D) at new eqm

Quantity Demanded = Quantity supplied

so Q* = 160, P*= 80

E) at each price level, Quantity supplied will fall by 40

so New supply schedule

Price	Quantity supplied
50	90
60	100
70	110
80	120
90	130
100	140

F) so at new eqm,

new Quantity Demanded = new Quantity supplied

so P = 100, Qd = Qs = 140

so Eqm Price rises, & eqm Quantity falls