Equilibrium Price And Equilibrium Quantity of Minivans

Running head: ECONOMICS 1
Microeconomics
Name
Student Number
Institution

ECONOMICS 2
Solutions
1. Consider the market for minivans. For each of the events listed here,
identify the effect on the equilibrium price and equilibrium quantity of
minivans (note: the answer should be increase, decrease, stay
the same, or indeterminate.).
Fill up the following answer sheet for Question 1: (note: the answer
should be increase, decrease, stay the same, or indeterminate.).
equilibrium price equilibrium
quantity
a. People decide to
have more
children.
.
Increase Increase
b. A strike by
steelworkers raises
steel prices.
Increase Decrease
c. Engineers
develop new
automated machinery
for the production of
minivans.
Decrease Increase
d. The price of
station wagons rises.
Increase Increase
a. A stock-market
crash lowers
people’s wealth
Decrease Decrease

ECONOMICS 3
2. The market for pizza has the following demand and supply schedules:
PRICE in $ QUANTITY
DEMANDED
QUANTITY
SUPPLIED
4 135 26
5 104 53
6 81 81
7 68 98
8 53 110
9 39 121
Question 2: Fill up the following answer sheet
a. What is the equilibrium
price in this market?
Equilibrium price is $6
b. What is the equilibrium
quantity in this market?
Equilibrium Demand is at $81
c. At price of $4 do you have
shortage or surplus?
There is a shortage since
Quantity demanded which is 135
is greater than quantity supplied
which is at 26. Shortage of 135-
26 =109
d. At price of $8 do you have
shortage or surplus?
There is a surplus since Quantity
demanded equals 53 is less than
quantity supplied which is at
110. Surplus of 110-53 =57