Table 1 shows weekly market information for a bicycle-repair business in 2022. The owner is considering whether an increase in the repair price will increas...
Question 1 Report
Table 1 shows weekly market information for a bicycle-repair business in 2022. The owner is considering whether an increase in the repair price will increase income.
| Price per repair ($) | Quantity demanded per week | Quantity supplied per week |
|---|---|---|
| 20 | 90 | 30 |
| 30 | 70 | 70 |
| 40 | 50 | 110 |
(a) State the equilibrium quantity of repairs per week. [1]
(b) Show the surplus of repairs at a price of $40. [1]
Answer Details
(a) Equilibrium quantity: 70 repairs per week. [1]
Equilibrium occurs where quantity demanded equals quantity supplied. At a price of $30, both are 70 repairs per week.
(b) Surplus: 60 repairs. [1]
At $40, firms supply 110 repairs but customers demand only 50. The excess supply is:
\[110 - 50 = 60\text{ repairs}\]
A surplus means that more is supplied than demanded.
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