Equilibrium price and quantity are $20 and 6 pizzas, respectively. Assume that the price of cheese...
Equilibrium price and quantity are $20 and 6 pizzas, respectively. Assume that the price of cheese increases (cheese is an important ingredient in pizza). Explain the adjustment process in the pizza market after the shock to the new equilibrium.
Homework Answers
The equilibrium quantity is 20 and the equilibrium price is 6
When the price of cheese increases, the cost of producing pizzas increases, so that the producers would decrease supply and the supply curve will shift to the left to S2.This will cause the equilibrium quantity to decrease and the equilibrium price to increase.
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Equilibrium price and quantity are $20 and 6
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Suppose the current equilibrium price of cheese pizzas is
$11.00, and 10 million pizzas are sold per month. After the
federal government imposes a $4.00 per pizza tax, the equilibrium
price of pizzas rises to $13.00, and the equilibrium quantity
falls to 8 million. This situation is illustrated in the
graph.
Compare the economic surplus LOADING... in this market when
there is no tax to when there is a tax on pizza.
1.) Use the triangle drawing tool to shade...
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