Econ Macro (book Only)
6th Edition
ISBN: 9781337408745
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 4, Problem 12P
To determine
The
Introduction:
Market surplus: When supply is more in the market than
Market shortage: When supply is less in the market than demand of the commodity, this excess demand or shortage in supply is known as market shortage.
Market equilibrium: Market equilibrium is the situation when there is no shortage or excess demand, there is no surplus or excess supply which implies quantity supplied equals quantity demanded. Anyone who wants to buy at the current price can and all producers who want to sell at that price can.
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The table below shows the quantity demanded and supplied on barley for each price per bushel.
Price per Bushel
Quantity Demanded per Month (million bushels)
Quantity Supplied per Month (million bushels)
Sate of the Market
(shortage or surplus)
$2.30
400
300
$2.40
370
320
$2.50
340
340
$2.60
310
360
$2.70
280
380
Based on the information above, plot a chart with supply and demand curves.
What are the equilibrium price and quantity of barley?
If the market price of barley is $2.70 per bushel, is there a shortage or surplus of barley? Calculate the shortage or surplus. As a result, would the market price rise or fall?
If the market price of barley is $2.40 per bushel, is there a shortage or surplus of barley? Calculate the shortage or surplus. As a result, would the market price rise or fall?
The table below shows the monthly demand and supply of gallons of Ghana Nuts Oil at different prices. Use the information in the table to answer the questions that follows:
Price per gallon
Quantity of gallons demanded
Quantity of gallons Supplied
20
5000
1000
25
4000
2000
30
3000
3000
35
2000
4000
40
1000
5000
Use the information in the table to sketch the demand and supply curve on the same axis. (NOTE: Graph sheet is not needed).
What is the equilibrium price and quantity?
Which of the prices would cause shortages? Calculate the shortages that may occur at those prices.
Suppose the Government of Ghana imposes a minimum price legislation which led to surpluses in the oil market, discuss two ways that can be use to address or mitigate the surpluses in the market.
Suppose the price of Ghana Nut Oil increase from 20 to 25, calculate the price elasticity of demand and supply of Ghana Nut Oil.
Demand and Supply which one is more…
Scenario 1: As part of an international trade agreement, the Oman government reduces the tax on imported coffee.
Will this affect the supply or the demand for coffee? Why?
Which determinant of demand or supply is being affected? Explain.
Show graphically the effect of changes in demand or supply.
How will this change the equilibrium price and quantity of coffee? Explain your reasoning.
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