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Demand and sup

Economics Apr 01, 2021

Demand and sup. often shift in the retail market for gasoline Below are two demand curves and two supply curves for gallons of gasoline In the month of May in a small town In Maine Some of the data are missing 
tbn following questions 
el 
peutiti. Soppl. 
9, 
.2 
9,.500 
6,000 
6,000 
6,000 
9,000 
2-00 
6,400 
9,000 
1 I 
5,000 
6,500 
a. Use the following facts to fill In the missing date In the table If deco nd Is Di and supply Is S,, the equilibrium quantity is 7.0 gallons per month When demand is D2 and Supply Ls S,, the equilibrium price Is $3.00 per gallon. When demand Is D2 and supply is Si, there ts an excess demand of 4,000 gallons per month at a price of Si. Per gallon if demand Is DI and suPPlY b •92, the equdIbrium quantity Is 8,000 galiorns per month 
b. Compare the two equilibriums. In the first demand Is Di and supply ts S, in the second. demand Is D, and supply Is S2 
By how much does the equilibrium quantity change? 
EqulibrIum quantity 
Ito ta sere V 
by L J gallons per month 
By how much does the equilibrium price change? 
Equllibrium pricektiblitoseeVlby8.11 
c. H supply falls from S2 to S, while demand simultaneous, declines from 02 to Dy does the equilibrium price rise. fall, or stay the same? 
IKidtoseaVI 
What happens if only supply b.? 
IftxtoweteVl 
What happens if only demand fall, 
ccbd. wile So I 
d Suppose that supply Is fixed at S, and that demand starts at CA, 
woByidtrs3aorpallpng per month would demand have to increase of each price level such that the equiberlum price per gallon Ogallons per month wc.0:drevsizo,siations , month would demand have to Increase, at each price level such that the equilibrium price par gallon C=1:19oitere per month 
 

Expert Solution

a)

Price D1 D2 S1 S2
$4  5000 7500 9000 9500
$3  6000 8000 8000 9000
2 7000 8500 7000 8500
$1  8000 9000 5000 8000

 

 

 

 

b) Equilibrium quantity increases by 1000.

Equilbruim price decrease by $1.

 

 

c) If supply falls from S2 to S1 while demand simultaneously declines from D2 to D1 the equilibrium price will fall.

Equilibrium price rise , when only supply decrease to s2 from s1.

 

 

d) 

a) 2000 gallons.

b) 4000 gallons

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