Assignment 1
The table below shows the quantity demanded and quantity supplied of DVDs at each price level.
Price (dollars) Quantity Demanded Quantity Supplied20 10 50018 25 40016 45 25014 80 20012 140 14010 200 808 300 406 450 5
a.Draw a figure showing the demand curve and the supply for DVDs. What is the market equilibrium price and the market equilibrium quantity?b. If the price of running shoes is $16, will there be a surplus or a shortage? How large is it? Explain how the market can adjust?
c.Now suppose the price is $8. Do we have a shortage or a surplus? How large is it? How the price of DVDs adjusts?
d.Suppose that the price of the DVDs decrease, resulting in the demand for DVDs increasing by 120 units at all prices. Draw the new demand curve on the same graph.
What are the new equilibrium quantity and equilibrium price of DVDs?

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