Problem
Suppose that the price of a night of admission at your hospital is determined by the market forces. Currently, the demand and supply schedules are as follows.
|
Price ($)
|
Quantity Demanded
|
Quantity supplied
|
|
40
|
1,000
|
800
|
|
80
|
800
|
800
|
|
120
|
600
|
800
|
|
160
|
400
|
800
|
|
200
|
200
|
800
|
1) Graph the supply and demand curves.
2) What is unusual about the supply curve.
3) Why might this be true?
4) What is the equilibrium price and quantity of the night of admission?
Next, your small city is going to grow next year by 5,000. The additional population will have the following demand schedule for hospital admissions.
|
Price ($)
|
Quantity Demanded
|
|
40
|
400
|
|
80
|
300
|
|
120
|
200
|
|
160
|
100
|
|
200
|
0
|
Calculate the new market demand schedule. (Show the new schedule). What will be the new equilibrium price and quantity?