The use of E-Books has increased in recent years, especially with the advent of mobile E-Readers. A marketing research firm recently developed the following supply and demand schedules for E-books:
|
Price/E-Book
|
Quantity Demanded
|
Quantity Supplied
|
| $18 |
4000 |
10,000 |
| 16 |
5000 |
9500 |
| 14 |
6000 |
9000 |
| 12 |
7000 |
8500 |
| 10 |
8000 |
8000 |
| 9 |
9000 |
7500 |
| 8 |
10000 |
7000 |
| 7 |
11000 |
6500 |
| 6 |
12000 |
6000 |
| 5 |
13000 |
5500 |
| 4 |
14000 |
5000 |
| 2 |
15000 |
4500 |
Questions:
- Construct a graph showing supply and demand in the E-Book market, using Excel.
- How are the Laws of Supply and Demand illustrated in this graph Explain your answers.
- What is the equilibrium price and quantity in this market?
- Assume that the government imposes a price floor of $12 in the E-Book market. What would happen in this market?
- Assume that the price floor is removed and a price ceiling is imposed at $6. What would happen in this market?
- Now assume that the price of E-Readers (used with E-Books) drops by fifty percent. How would this change impact the demand for E-Books? Explain your answer and reconstruct the graph developed in question one to show this change.