Answered: The graph below depicts the daily…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The graph below depicts the daily demand and supply for parking spaces. The demand curve is downward sloping as usual, but the supply curve is vertical because there are a fixed number of spaces available at any given time. If the university does not charge a price to park by the hour, the problem this causes is a ______. To resolve this problem the university could charge $ _______ per hour to park. Part 2. The diagram below is a more realistic depiction of the market for parking spaces at another university. Rather than a single demand curve, there are two demands depending on the time of day. Peak demand, Dpeak, occurs between 9am and 3pm, and off peak demand, Doffp, occurs the rest of the day. Suppose the university want to add enough spaces to eliminate the shortage. How many additional spaces would the university need to add? ______ spaces Part 3. Suppose the university does not have enough funds to provide any more spaces. In order to eliminate parking congestion, this university would want to charge $ ______ per hour during peak times and $ ______ per hour during off-peak times.

Price per Hour
15
M.N
7
6
15
3
2
1
Parking
5
S1
DOMP
W
Peak
G
Number Spaces (in
1.000s)

Price per Hour
16
10
8
7
2
F
Parking
1
D1
11
Number Spaces (in
1,000s)

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Introduction

Demand and supply are the two fundamental forces that drive the economy. The quantity of a good or service that consumers are willing and able to buy at a specific price is known as demand, whereas the quantity that producers are willing and able to offer at the same price is known as supply. Prices stay steady when supply and demand are in balance.When there is an imbalance between demand and supply, prices will either rise or fall depending on the situation. For example, if demand is greater than supply, prices will rise; if supply is greater than demand, prices will fall.

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