Price $5 $6 $7 $8 $9 $10 Column 2 92 68 50 37 26 9 Column1 36 50 73 102 Based on

Question

Price $5 $6 $7 $8 $9 $10 Column 2 92 68 50 37 26 9 Column1 36 50 73 102 Based on the observed data contained in the table, one can infer that column 1 depicts a relationship while column 2 shows a a. demand; supply b. supply; supply c. demand; demand d. supply; demand 8. relationship. 9. The observed equilibrium price is with an equilibrium quantity of a. b. c. d. $7; 50 units $8; 110 units $5; 11 units $7; 100 units 10. If the observed price is $6, then a of units would prevail. a. surplus; 68 b. shortage; 32 c. shortage; 36 d. surplus;-32 11. If the observed price is $10, then a of units would prevail. a. shortage; 9 b. surplus; 102 c. surplus; 93 d. surplus; 111

Explanation / Answer

8.

The demand for good is an inverse relationship between price and quantity. The graphical relationship between price and quantity demanded is depicted by the demand curve. Any point on the demand curve shows the quantity consumer demands for any particular price.

The supply for good is the direct relationship between price and quantity. The graphical relationship between price and quantity supplied is depicted by the supply curve. Any point on the supply curve shows the quantity producers supply for any particular price.

In the table above column 1 has increasing data quantity with increase in price. That is as price goes from $6 to $7 to $8, the quantity rises from 11 to 36 to 50. Thus column 1 is supply data. By the same reasoning column 2 represents decreasing quantity value and hence shown demand data.

Then the correct option is

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9.

The equilibrium is the point at which the quantity demanded by the consumer equals the quantity supplied by the producers at a particular price. In this case demand equals supply at a quantity 50 and the corresponding market price is $7.

Therefore, the correct option is

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10.

At $6, the quantity demanded is 68 units and quantity supplied is 36 units. Then quantity demanded is gretaer than quantity supplied. hence there is shortage in the market of (68-36)=32 units.

Therefore, the correct option is

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11.

At $10 the quantity demanded is 9 units and quantity supplied is 102 units. Then quantity demanded is smaller quantity supplied. Hence there is surplus in the market of (102-9)=93units.

Therefore, the correct option is

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