ViewZoom Insert Table Chart Text hape Mecia Comment Format D

ViewZoom Insert Table Chart Text hape Mecia Comment Format Document ECO 2023.003 Homework1 Economics HW 1 Consider the following hypothetical supply and demand schedules for the newest smartphone at USF. Supply Schedule Demand Schedule Price 700 650 600 550 500 Quantity 10,000 8,000 6,000 4,000 2,000 Price 700 650 600 550 500 Quantity 1,000 2,000 3,000 4,000 5,000 a. What is the equilibrium price and quantity? Briefly explain using the table b. At a price of 500, is there a shortage or a surplus of smartphones? What is the size of the shortage/surplus? Briefly explain using the table c. At a price of 650, what is the size of the shortage/surplus? Briefly explain using the table 102 words

Solution

a. At Equilibrium, the quantity demanded must be equal to the quantity supplied which is attained at a price of 550. Thus, the Equilibrium price is 550 and the Equilibrium quantity is 4000.

b)

At a price of 500, the quantity demanded exceeds the quantity supplied. Thus there is a shortage in the market by 5000-2000 = 3000 units.

C) At a price of 650, the quantity supplied exceeds the quantity demanded. Thus there is a surplus in the market by 8000-2000 = 5000 units.

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