This exercise is designed to help reinforce the student's understanding of the topic of shifts in equilibrium. This exercise can be used in conjunction with any economics textbook that addresses this topic. NOTE: As you are working through each scenario in this exercise make sure that you label all parts of your diagrams to avoid mistakes. This exercise should be done using a ruler if necessary so that your lines Do not use pen! Do not use pen!

The diagram to the right shows the supply and demand curves for SUV's in a particular geographical area. Assume that all SUV's sell for the same marketdetermined price. The diagram shows factors that might cause a shift in the supply and demand curves. What would be the equilibrium price of an SUV in this market be$?$

per sedan

What would be the equilibrium quantity for SUV's bought and sold?

per month

QUANTITY $($in thousands$)$

Suppose that the price of an SUV was $$35,000.$

In this case, there would be which would exer pressure on prices.

A$.$ Shortage $($excess demand$)$ of $100$ SUV's per month; upward

B$.$ Shortage $($excess demand$)$ of $400$ SUV's per month; upward

C$.$ Surplus $($excess supply$)$ of $400$ SUV's per month; downward

D$.$ Shortage $($excess supply$)$ of $500$ SUV's per month; downward

How much was the demand?

Suppose that the price of an SUV was $$15,000.$

In this case, there would be which would exert pressure on prices.

A$.$ Shortage $($excess demand$)$ of $400$ SUV's per month; upward

B$.$ Shortage $($excess demand$)$ of $300$ SUV's per month; upward

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