Homework: Chapter 3

§ 1. If a product becomes more popular,

ú A) Which curve will shift? – Demand
ú B) Along which curve will price and quantity move? –
Supply
ú C) At the new equilibrium, will price be higher or lower? –
Higher
ú D) At the new equilibrium, will quantity be higher or
lower? – Higher
Homework: Chapter 3
§ 2. Assume the following data in the gasoline market
ú A) Graph the Demand and Supply Curves
Price per Gallon $2 $2.25 $2.50 $2.75 $3 $3.25 $3.50
Quantity Demanded 36 35 34 33 32 31 30
Quantity Supplied 24 26 28 30 32 34 36
ú B) What is the equilibrium price? $3
ú C) If supply at every price is reduced by 6 gallons,
what will the new equilibrium price be? $3.5
ú D) If the government freezes the price of gas at
the initial equilibrium price, what surplus or
shortage exists when supply is reduced?
A shortage of 6 gallons