Equilibrium) Assume that the market for corn is depicted as in the table that ap
ID: 1139669 • Letter: E
Question
Equilibrium) Assume that the market for corn is depicted as in the table that appears below. a. Complete the table below. b. What market pressure occurs when quantity demanded exceeds quantity supplied? Explain. c. What market pressure occurs when quantity supplied exceeds quantity demanded? Explain. d. What is the equilibrium price? e. What could change the equilibrium price? f. At each price in the first column of the table below, how much is sold? Price Quantity Demanded Quantity Supplied per (millions of (millions of Surplus/ Will Price Bushel bushels) $1.80 2.00 2.20 2.40 2.60 2.80 bushels) Shortage Rise or Fall? 320 300 270 230 200 180 200 230 270 300 330Explanation / Answer
Price per bushel $ Quantity demanded Quantity supplied Shortage/ Will price rise or fall Millions of bushels Millions of bushels Surplus 1.80 320 200 120 Shortage Price wil rise 2.00 300 230 70 Shortage Price wil rise 2.20 270 270 0 Equilibrium 2.40 230 300 -70 Surplus price will fall 2.60 200 330 -130 Surplus price will fall 2.80 180 350 -170 Surplus price will fall Shortage is excess quantity demanded over excess quantity supplied. Surplus is excess quantity supplied over excess quantity demanded. Equilibrium price and quantity occurs when quantity demanded equals quantity supplied. When there is a shortage, producers will raise the prices. When there is a surplus the producers will lower the prices to sell excess goods. The equilibrium price and quantity will change if there is a shift in the demand and supply curves due to changes in determinants of demand or supply.
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