Answer:
12
Step-by-step explanation:
Given a table of supply and demand at each price point, you are asked for the equilibrium price if the demand numbers are decreased by 0.5 million.
Equilibrium price
The equilibrium price is the price at which the quantity demanded is equal to the quantity supplied.
For the given table, we see that a price of $14 thousands will result in both demand and supply being 2.00 millions per year. That is the equilibrium price before any adjustment to the table is made.
The problem statement is telling you to use a table that has all of the demand values decreased by 0.5 million. That makes the demand column read ...
2.25, 2.00, 1.75, 1.50, 1.25, 1.00, 0.75
This new column of reduced demand values matches the numbers in the supply column when they are both 1.75 million per year. That match occurs on the line with price $12 thousand.
The new equilibrium price is $12 thousand.
