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Demand and supply - short answer


Interaction of demand and supply

Question 1

The data in the table below shows the demand and supply for digital cameras at various prices.

Price () Quantity demanded (millions per year) Quantity supplied (millions per year)
16 140 20
32 120 60
48 100 100
64 80 140
80 60 180

(a) Plot the demand and supply curves on a diagram.
(b) What would be the excess demand or supply if the price was set at 32?
(c) What would be the excess demand or supply if the price was set at 80?
(d) What is the equilibrium price and quantity?
(e) If income rises and demand, as a result, rises by 20 million units at each level, what will be the new equilibrium price?

Question 2

In the table below tick the appropriate column to show the impact of the change given on the market for cinema tickets.

Change Demand shift right Demand shift left Supply shift right Supply shift left
There is an increase in real incomes
Stelios Haji-Ioannou rolls out the EasyCinema low price model nationwide
The commission paid to film distributors by the cinemas falls
Planning law changes to restrict the development of out-of-town entertainment complexes
Pay-per-view cable, satellite and internet film services are developed and grow in popularity
Spiralling film production costs mean fewer new releases
Cinema operators develop new premium services