(Transcript of audio with descriptions. Transcript includes narrator headings and description headings of the visual content)
(Speaker)
This problem is asking you to identify the effects of the decrease in supply on the equilibrium price and quantity.
(Description)
The table consists of 3 columns: Price of truck, Quantity of trucks demanded (millions), Quantity of trucks supplied (millions). The table consists of 5 rows.
The first row: Price of truck is, 20000 dollars, Quantity of trucks demanded is, 20 million, Quantity of trucks supplied is, 14 million.
The second row: Price of truck is, 25000 dollars, Quantity of trucks demanded is, 18 million, Quantity of trucks supplied is, 15 million.
The third row: Price of truck is, 30000 dollars, Quantity of trucks demanded is, 16 million, Quantity of trucks supplied is, 16 million.
The fourth row: Price of truck is, 35000 dollars, Quantity of trucks demanded is, 14 million, Quantity of trucks supplied is, 17 million.
The fifth row: Price of truck is, 40000 dollars, Quantity of trucks demanded is, 12 million, Quantity of trucks supplied is, 18 million.
(Speaker)
We will start by finding the new supply line.
(Description)
A new blank column Quantity of trucks supplied after regulations (millions) is added to the right side of the table.
(Speaker)
The problem specifically says that new costly regulations will cause manufacturers to reduce supply by 1/3 at any given price. If suppliers are reducing supply by 1/3 at all price levels, this is the same as saying they will produce 2/3 of their current supply. The new supply line is found by multiplying the quantity supplied by 2/3 at all prices.
(Description)
The column Quantity of trucks supplied after regulations (millions) is filled with the following:
The first row: equals 14 times two-thirds equals 9.3.
The second row: equals 15 times two-thirds equals 10.0.
The third row: equals 16 times two-thirds equals 10.7.
The fourth row: equals 17 times two-thirds equals 11.3.
The fifth row: equals 18 times two-thirds equals 12.0.
(Speaker)
We can see the new supply in the table.
(Description)
The fifth row of the table is briefly highlighted.
(Speaker)
It may also help to graph the new supply line.
(Description)
The coordinate plane with the horizontal x-axis and the vertical y-axis is drawn.
The horizontal axis is labeled as Quantity of trucks. It is measured from 0 to 20 million with a break between 0 and 8 million.
The vertical axis is labeled as Price of truck. It is measured from 0 to 45000 dollars with a break between 0 and 15000 dollars.
There are two lines on the plot.
The first line, which is labeled Demand, passes through points with the following coordinates: 12 and 40000, 14 and 35000, 16 and 30000, 18 and 25000, 20 and 20000.
The second line passes through points with the following coordinates: 14 and 20000, 15 and 25000, 16 and 30000, 17 and 35000, 18 and 40000.
These two lines intersect at the point with coordinates, 16 and 30000.
(Speaker)
The new supply line plots the price with the new quantity supplied after the new regulations.
(Description)
There are five new points are plotted on the coordinate plane. They have the following coordinates: 9.3 and 20000, 10 and 25000, 10.7 and 30000, 11.3 and 35000, 12 and 40000.
(Speaker)
We find that the new regulations decrease the quantity supplied at all price levels, resulting in a leftward shift of the supply line.
(Description)
A line connecting these five points is drawn on the plot. This line is new Supply line. It intersects with the Demand line at the point with coordinates, 12 and 40000.
(Speaker)
The new equilibrium will result in a higher price of 40000 dollars and only 12 million trucks will be purchased.
(Description)
40000 dollars on the y-axis and 12 million trucks on the x-axis are highlighted.