Question

the table below shows the demand and supply for hip hop cds in peterborough.

price	quantity demanded	quantity supplied 1	quantity supplied 2
2	140	100
4	130	130
6	120	150
8	110	170
10	100	200

a. what is the equilibrium price and quantity traded?
the equilibrium price is $\underline{\quad}$ and the quantity traded is $\underline{\quad}$.

b. suppose supply increases by 40. complete the last column in the table above.

c. what would be the price and quantity traded at the new equilibrium?
the equilibrium price is $\underline{\quad}$ and the quantity traded is $\underline{\quad}$.

d. after the increase in supply, at a price of $4 there would be a click to select of $\underline{\quad}$ units.

Explanation:

Step1: Find initial equilibrium

Equilibrium occurs where quantity demanded = quantity supplied. Check the table: at price $4$, Quantity Demanded = 130, Quantity Supplied 1 = 130.

Step2: Calculate new supply values

Add 40 to each Quantity Supplied 1 value:

• Price $0$: $70 + 40 = 110$
• Price $2$: $100 + 40 = 140$
• Price $4$: $130 + 40 = 170$
• Price $6$: $150 + 40 = 190$
• Price $8$: $170 + 40 = 210$
• Price $10$: $220 + 40 = 260$

Step3: Find new equilibrium

Find where quantity demanded = new quantity supplied. At price $2$, Quantity Demanded = 140, Quantity Supplied 2 = 140.

Step4: Calculate surplus at $4$

At price $4$, Quantity Supplied 2 = 170, Quantity Demanded = 130. Surplus = $170 - 130 = 40$.

Answer:

a. The equilibrium price is $\$4$ and the quantity traded is $130$
b. Completed Quantity Supplied 2 column:

Price	Quantity Demanded	Quantity Supplied 1	Quantity Supplied 2
2	140	100	140
4	130	130	170
6	120	150	190
8	110	170	210
10	100	220	260

c. The equilibrium price is $\$2$ and the quantity traded is $140$
d. After the increase in supply, at a price of $\$4$ there would be a surplus of $40$ units