Question

11-1.The market for pizza has the demand and supply schedules as the table 1.1 Graph (plot) the demand and supply curve by using the information of the demand and supply schedule in the table. Total She t the point,of derhand andsupply at each given price level. Demand and Supply Sehedule 4-4-44-- 104 81 68 53 39 26 pizzas 53 81 98 S6 S8 59 34 121 For ploting demands iag the belowgivn s0 For ploting supplies, drag the below given 2 What is the equilibrium price and quantity in this market? Equilibrium Price: Equilibrium Quantity: .3 If the actual price in this market were above the equilibrium price, say S8, what is the amount of the gap between the quantity supplied and the quantity demanded? And what is the gap called?

Answer 1

1.1) The graph no. (1.1) is attached in the upper panel of the image.

1.2)

The equilibrium price is found where the supply and demand curves interact. At the equilibrium price, the quantity demanded is equal to the quantity supplied.

As we can see in the graph (attached as an image)

The demand and supply curves meet at Price = $6 and Quantity = 81 pizzas

So, Equilibrium Price = 6 dollars

And Equilibrium Quantity = 81 Pizzas

1.3)

As we can see in the graph (1.3) in the lower panel of the attached image,

If the actual price is above the equilibrium price, then there is disequilibrium in the market.

At a price of $8 per pizza, the quantity of the pizza supplied = 110 pizzas exceeds the quantity demanded = 53 pizzas.

Difference between quantity supplied and quantity demanded = 110 - 53 = 57 pizzas.

There is a surplus of the good: Suppliers are unable to sell all of the pizzas at $8.

This situation is called the situation of "excess supply".

The interpretation of this excess supply means that at the price of $8 sellers have 57 pizzas at spare, means they want to sell but they can't. They respond to this situation by cutting the price of the pizza.