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23 August, 11:27

The following demand and supply schedules are for bushels of apples in a local market. Price Quantity Demanded Quantity Supplied $20 200 1,000 $18 400 800 $16 600 600 $14 800 400 $12 1,000 200

a. What are the equilibrium price and quantity of apples?

b. At a price of $20, is there a shortage or surplus of apples? How much of a surplus or shortage is there?

c. At a price of $12, is there a shortage or surplus of apples? How much of a surplus or shortage is there?

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  1. 23 August, 15:11
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    Part A:

    Equilibrium price=$16

    Equilibrium Quantity=600

    Part B:

    Surplus by amount 800.

    Part C:

    Shortage by 800

    Explanation:

    Part A:

    Equilibrium Price is where demand is equal to the supply so at $16 both demand and supply is equal i. e 600.

    Part B:

    At $20, the quantity of apples supplied is 1000 and demand is 200 so it is the surplus of 800 apples.

    Surplus Quantity = Supplied - Demand

    Surplus Quantity=1000-200=800 apples

    Part C:

    At $12, the quantity supplied is 200 apples but the demand is 1000 so there is a shortage of 800 apples.

    Shortage=Supplied - Demand

    Shortage quantity=200-1000=-800 apples (-ve for shortage)
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