Use the information in the table above to answer the questions in part one. If t

Question

Use the information in the table above to answer the questions in part one.

If the market is allowed to operate freely and reach its equilibrium, what will the equilibrium price and quantity be? Explain your answer (Why did you select the answers you did). Include in your explanation, what would happen if the price being charged was higher or lower than the equilibrium price.

Price in Dollars Quantity Demanded Quantity Supplied 10,000 700 450 12,000 675 500 14,000 650 650 16,000 625 700 18,000 600 750 20,000 575 800

Explanation / Answer

from table we see that supply and demand are both equal to 650 in 3rd row whose corresponding price is $14000

Hence Equilibrium price =$14000

and quantities that is supply and demand both will be 650

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if the price being charged was higher than the equilibrium price then it will create shortage of supply due to higher price and not all products will be sold.

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if the price being charged was lower than the equilibrium price then it will create excess opportunity of supply.

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