Question

The following graph shows the monthly demand and supply curves in the market for calendars. 

Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. 

Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. 

The equilibrium price in this market is $_______  per calendar, and the equilibrium quantity is _______  calendars bought and sold per month. 

Complete the following table by indicating at each price whether there is a shortage or surplus in the market, the amount of that shortage or surplus, and whether this places upward or downward pressure on prices. 

Answer 1

Ans) Equilibrium is a point where demand and supply curve intersect. Here quantity demanded is equal to quantity supplied.

When price is below equilibrium price, there is shortage or excess demand. When price is above equilibrium price, there is surplus or excess supply.

Equilibrium price = $40

Equilibrium quantity = 250 calenders.

At price of $32÷

Kindly note that the values of quantity demanded and quantity supplied may slightly vary. Kindly put the price in graph input tool to know the exact value.

Quantity demanded = 375 calenders

Quantity supplied = 125 calenders

Shortage = 375 - 125 = 250 calenders

Since the price will try to reach equilibrium price, there will be an upward pressure on the price.

At price of $48÷

Quantity demanded = 125 calenders

Quantity supplied = 375 calenders

Surplus = 375 - 125 = 250 calenders

Since price will try to reach equilibrium price, there will be a downward pressure on the price.