A. Assume the market supply and market demand equations for TVs are as follows.

P=420+0.1Qs

P= 1220-2.4Qd

The equilibrium price is $452 and the equilibrium quantity is 320. The technological

advancements allow firms to sell an additional 1,250 units at every price level. Solve for

the new supply curve, new equilibrium price, and new equilibrium quantity.

B. Solve for the change in consumer surplus and for the change in producer surplus from the

technological advancement in part B.

Answer rating: 100% (QA)

A To solve for the new supply curve new equilibrium price and new equilibrium quantity we need to consider the effect of the technological advancements on the supply equation The original supply equation is P 420 01Qs The technological advancements allow firms to sell an additional 1250 units at every price level This means the new supply equation will be P 420 01Qs 1250 To find the new equilibrium price and quantity we need to equate the new supply equation with the demand equation P 1220 24Qd Setting the new supply equation equal to the demand equation 420 01Qs 1250 1220 24Qd Simplifying the equation 420 01Qs 125 1220 24Qd 545 01Qs 1220 24Qd Since the equilibrium price is 452 we can substitute P 452 into the equation 545 01Qs 452 24Qd Now we can solve for the new equilibrium quantity 01Qs 24Qd 545 452 01Qs 24Qd 93 Since the original equilibrium quantity is 320 we know that Qs Qd 320 Substituting this into the equation 01Qs 24320 Qs 93 01Qs 768 24Qs 93 23Qs 93 768 23Qs 675 Qs 675 23 Qs 29348 Substituting the value of Qs back into the equation Qs Qd 320 to solve for Qd 29348 Qd 320 Qd 320 29348 Qd 2652 Therefore the new equilibrium price is 452 the new equilibrium quantity is approximately 2652 and the new supply curve is P 420 01Qs 1250 B To solve for the change in consumer surplus and producer surplus from the technological advancement ... View the full answer