Economics: The Basics 1st Edition by Mike Mandel

Exercise 4

The following table reports the (hypothetical) market supply and demand schedules for the iPod and other portable music players.

a) When the price per music player is $100, what is the quantity demanded? What is the quantity supplied? Is the market in excess supply, excess demand, or equilibrium?
b) When the price per music player is $300, what is the quantity demanded? What is the quantity supplied? Is the market in excess supply, excess demand, or equilibrium?
c) What is the equilibrium price for the music player market? What is the equilibrium quantity?
d) Graph the supply and demand curves, and show the equilibrium price and quantity of the market.
e) Suppose a new maker of music players enters the market and produces just an extra 2 million players no matter what the price is. Show the new supply curve. What are the new equilibrium price and quantity?