8.) The graph below depicts the market for oranges at a local farmers\' market.
ID: 1137765 • Letter: 8
Question
8.) The graph below depicts the market for oranges at a local farmers' market.
Instructions: Enter your answers as a whole number.
a. If a producer tries to sell oranges at a price of $0.40 per pound, what will be the quantity demanded and quantity supplied at this price?
Qd = ___ pounds of oranges
Qs = ___ pounds of oranges
b. Determine whether there is a surplus or a shortage at a price of $0.40 per pound, and determine the size of the surplus or shortage.
At this price, there will be a (shortage or surplus) of ___ pounds of oranges.
Market for Oranges Price (dollars) $1.00 $0.90 $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 20 40 60 80 100 120 140 160 180 200 Quantity (pounds)Explanation / Answer
Answer
a)
at P=$0.4
Qd=160
Qs=70
b)
Shortage=160-70=90
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The quantity is found in the demand and supply curve from price and the market is in equilibrium at Qd=Qs where demand and supply curve interests where P=$0.7
the price below the equilibrium price develops shortage because the Qd is higher than Qs at lower prices. The shortage means the Qd>Qs and the market needs more goods.
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