1. Individual Problems 8-1

The widget market is competitive and includes no transaction costs. Five suppliers are willing to sell one widget at the following prices: $30, $20, $10, $5, and $3 (one seller at each price). Five buyers are willing to buy one widget at the following prices: $10, $20, $30, $38, and $44 (one buyer at each price).

For each price shown in the following table, use the given information to enter the quantity demanded and quantity supplied.

Price

Quantity Demanded

Quantity Supplied

($ per widget)

(widgets)

(widgets)

$3

$5

$10

$20

$30

$38

$44

In this market, the equilibrium price will be

per widget, and the equilibrium quantity will be 1, 5, 0, 2, 4, 3 widgets.

2. Individual Problems 8-3

Suppose that due to the development of a new flu vaccine for a specific type of flu, the demand for hand sanitizer has decreased by 50%.

Smith & Smith, a company that produces and sells hand sanitizer, should increase or decrease production of its hand sanitizer.

Suppose that there is evidence that a new flu, H15N9, is slowly developing and spreading.

True or False: Smith & Smith should significantly decrease production capacity by getting rid of capital equipment.