Question

1. The table below shows the quantity demanded and supplied on barley for each price per bushel. Quantity Demanded Quantity Supplied per Month (million bushels) Sate of the Market (shortage or surplus) per Month (million bushels) Price per Bushel $2.30 $2.40 $2.50 $2.60 $2.70 300 400 370 320 340 340 310 360 380 280 a. Based on the information above, plot a chart with supply and demand curves. b. What are the equilibrium price and quantity of barley? c. If the market price of barley is $2.70 per bushel, is there a shortage or surplus of barley? What is the shortage or surplus? As a result, would the market price rise or fall? d. If the market price of barley is $2.40 per bushel, is there a shortage or surplus of barley? What is the shortage or surplus? As a result, would the market price rise or fall? 2. How will an increase in population growth in Rock Hill affect the equilibrium price and quantities of residential houses? Plot a chart with supply and demand curves to illustrate your idea.

Answer 1

a.

a.

3 3O0 3-80 2.60 2 S0 3 40 2-30 260 3o0 360 440 Soc

b.

The equilibrium point will be determined by the intersection of the demand and supply curve.

Hence equilibrium price is $2.50.

Quantity is 340 units.

c.

If market price is $2.70, there will be surplus because supply is more than the demand.

Surplus=380-280

=100 units of barley.

Since there is surplus, so it leads to fall in the price..

d.

If market price is $2.40, there will be shortage because supply is less than the demand.

Shortages=370-320

=50 units of barley.

Since there is shortage, so it leads to rise in the price.