Question: 14. (1 pt) Answer the next three questions based on the right-hand side demand and supply model for a business firm producing motorcycles. Assume

14. (1 pt) Answer the next three questions based on the right-hand side demand and supply model for a business firm producing motorcycles. Assume that 300 motorcycles is the optimal and most profitable level of production for the firm. All dollars are in thousands. Price ($) 30 20 10 Dr Das D 300 Motorcycles (a) What are the equilibrium price and quantity at the medium level of demand (DM)? The equilibrium price is $ and the equilibrium quantity is motorcycles. (b) What will be the equilibrium price and quantity if there is a demand shock that unexpectedly lowers demand (DL)? The equilibrium price will be $ _; the equilibrium quantity will be motorcycles. (c) What can you conclude will happen to prices and output when this model is shocked by changes in demand?

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