Problem
Consider the detective novel market. Information collected by a survey made it possible to determine the following demand function and supply function:
Qd=50-2P
Qo=2P-10
• Graphically represent the supply and demand curves of the detective novel market
• Determine the market equilibrium for mystery novels. Consider the following shock: television becomes popular at the expense of the reading of mystery novels.
• Does this shock concern the supply of crime novels, the demand or both? Explain.
• What is the impact of this shock on the supply and demand curves of crime novels? Explain.
• What is the impact of this shock on the balance of the detective novel market? Consider the following shock: A new printing machine that reduces the cost of printing mystery novels is developed by a Japanese company.
• Does this shock concern the supply of crime novels, the demand or both? Explain.
• What is the impact of this shock on the supply and demand curves of crime novels? Explain.
• What is the impact of this shock on the balance of the detective novel market?