Question

Please answer the question, A, B, C, and D. Thank you.

The following graph represents the market for soya beans. Price ($) 20 40 80 100 60 Quantity a) What is the equilibrium price and quantity traded for the soya beans? [2 marks] Price: Quantity Traded: b) If the price of soybeans were $14 per unit, would there be a shortage, surplus, or neither? Circle the correct response. [1 mark] SHORTAGE SURPLUS NEITHER c) Suppose Supply increased by 30 units. Draw the new supply curve Sz on the graph. [2 marks] d) What is the new equilibrium price and quantity traded? [2 marks] Price: Quantity Traded:

Answer 1

First of all we have recreated the given graph in Excel and have also plotted the new supply curve S2 in which the supply has increased by 30 units.

20 18 16 14 12 10 8 4 0 C 20 40 60 80 100 120 140 160 S1 D1 S2

a) Equilibrium price and quantity is where curves S1 and D1 are intersecting. This happens at the price of 10 and a quantity of 70

b) At price of 14, the supply is of 90 and the demand is of 60 therefore there is a surplus

c) New graphs shows a parallel shift as price didnt change but quantity increased

d) Equilibrium price and quantity are 80 units at a price of 6