Answer to Question #308149 in Microeconomics for Usman ali

Question

Q-7. The market for pizza has the following demand and supply schedules:

Price Quantity Demanded Quantity Supplied

4 135 26

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

a. Graph the demand and supply curves. What are the equilibrium price and quantity in this market?

From the graph, the Equilibrium price = $6, and Equilibrium quantity = 81 units.

b. If the actual price in this market were above the equilibrium price, what would drive the market toward the equilibrium?

To get some of the surplus supply out of the shop, the pizza vendor would have to cut the price. As a result, the quantity demand rises, and the price falls until equilibrium is attained.

c. If the actual price in this market were below the equilibrium price, what would drive the market toward equilibrium?

There would be a pizza supply shortfall or an excess in demand. If the pizza vendor raises prices, demand will fall and the quantity supplied will increase, bringing them back to equilibrium.