Answer to Question #297138 in Microeconomics for Malik

Question

The market for pizza has the following demand and

supply schedules:

Price Quantity Demanded Quantity Supplied

$4 135 pizzas 26 pizzas

5 104 53

6 81 81

7 68 98

8 53 110

9 39 121

a. Graph the demand and supply curves. What are

the equilibrium price and quantity in this market?

b. If the actual price in this market were above the

equilibrium price, what would drive the market

toward the equilibrium?

c. If the actual price in this market were below the

equilibrium price, what would drive the market

toward the equilibrium?

Answer 1

Solution:

a.). The demand and supply graph are as below:

The equilibrium price = 6

The equilibrium quantity = 81 units

 

 

b.). If the actual price in this market is higher than the equilibrium price of 6, the quantity supplied will exceed the quantity demanded, resulting in a surplus. As a result, suppliers will lower their prices to reduce the surplus in order to gain sales, driving the market toward equilibrium.