Use the Accompanying Graph to Answer the Following Questions

question 174

Essay

Use the accompanying graph to answer the following questions.

a.What is the equilibrium price and equilibrium quantity in this market?
b.Draw an increase in demand and explain what happens to the equilibrium price and equilibrium quantity.
c.This is a special type of supply curve that we call an inelastic supply curve.What special property does it have?

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Definitions:

Cost Driver

An element that leads to a variation in the expense associated with an action.

Semivariable Cost

Costs that have both fixed and variable components, changing in response to activity level but not directly proportional to it.

Variable Costs

Costs that change in proportion to the level of goods or services produced, including costs for materials and labor directly involved in production.

Total Costs

The sum of all expenses incurred in the production of goods or services, including fixed and variable costs.