The following table shows the supply and demand in the marke

The following table shows the supply and demand in the market for shoes in Los Angeles Price ($ per pair) 20 40 60 80 100 Quantity Demanded (Pairs per year) 550 450 400 300 250 Quantity Supplied (Pairs per year) 100 200 250 450 600 On the following graph, plot the demand for shoes using the blue points (circle symbol). Next, plot the supply of shoes using the orange points (square symbol). Line segments will automatically connect the points. Remember to plot from left to right. Finally, use the black point (X symbol) to indicate the equilibrium price and quantity in the market for shoes. Dashed drop lines will automatically extend to both axes PRICE (Dollars per pairl 120 Demand 100 Supply 80 Equilibrium 60 40 20 100 200 300 400 500 600 QUANTITY (Pairs Help Clear All pairs per year per pair and the equilibrium quantity is In the market for shoes, the equilibrium price is

Solution

Answer:

The equillibrium price of sedan in this market is 30000 per sedan, and the equillibrium quantity is 450 sedans bought and sold per month.

Suppose the price of a sedan is $40000. In this case, there would be surplus of 300 sedans per month (=600-300), which would exert downward pressure on prices. (Supply>Demand)

Now, suppose the price of a sedan is $25000. In this case, there would be shortage of 150 sedans per month (525 - 375 = 150), which would exert upward pressure on prices. (Demand> Supply)