Question

Figure: The Demand and Supply of Wheat Price (per bushel) 2 4 6 8 10 12 Quantity of wheat (thousands of bushels per period) 6a. If there were an increase in demand of 2,000 bushels at each price, the equilibrium price and quantity would be and bushels, respectively. A) $5; 5,000 B) $6; 7,000 C) $7; 7,000 D) $8; 8,000 6b. (Figure: The Demand and Supply of Wheat) If a price of $8 temporarily exists in this market: A) a shortage of 2,000 bushels will result. B) a surplus of 4,000 bushels will result. C) a shortage of 4,000 bushels will result. D) a surplus of 6,000 bushels will result.

Answer 1

C) $7; 7000

Demand curve will shift rightward by 2000 at each price level. It will intersect the supply curve at P=7 and Q= 7000

B) a surplus of 4000 bushels will result

At P= 8 quantity demanded is 4000 and quantity supplied is 8000, surplus of 8000-4000= 4000 is created.