University:
Kentucky State University
Course:
ECO 301 | Microeconomics
Academic year:

2020
Views:

193

Pages:

2
Author:

Alexa Livingston

Student: Date: 21/01/2020 The question: The market for pizza has the following demand and supply schedules (attachment) a. Graph the demand and supply curves. What is the equilibrium price and quantity in this market? b. If the actual price in this market were above the equilibrium price, what would drive the market toward the equilibrium? c. If the actual price in this market were below the equilibrium price, what would drive the market toward the equilibrium? Price $4 5 6 7 8 9 Quantity Demanded 135 pizzas 104 81 68 53 39 Quantity Suppled 26 pizzas 53 81 98 110 121 Price ($) Solution: a. The chart shows the demand and supply curves: The demand and supply curves 10 9 8 7 6 5 4 3 2 1 0 20 40 60 80 100 120 140 160 Quantity (pizzas) Demand Supply The graph experiences the quantity supplied equals quantity demanded (reach the equilibrium point) at the price 6 dollars (equilibrium price) and the quantity is 81 pizzas (equilibrium quantity). b. If the actual price in this market were above the equilibrium price, it is synonym with: quantity supplied is greater than quantity demanded which creates a surplus. The solution here is suppliers should reduce the price to reach the equilibrium. c. If the actual price in the market were below the equilibrium price, it is synonym with: quantity supplied is less than quantity demanded creating a shortage. The solution here is suppliers should raise the price until reach the equilibrium.