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  • Price Supply

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    A shortage occurs when the quantity demanded exceeds the quantity supplied, resulting in unmet demand. This is shown in the first graph where demand is 4 and supply is 2 at a price of $6, creating a shortage of 2 units. To resolve the shortage, suppliers raise prices to $10, lowering quantity demanded to 3 and raising quantity supplied to 3, restoring market equilibrium. A surplus occurs when quantity supplied exceeds quantity demanded, resulting in unsold excess units. This is shown in the second graph where supply is 4 and demand is 2 at a price of $14, creating a surplus of 2 units. To resolve the surplus, suppliers lower prices to $10, increasing quantity demanded to 3 and decreasing quantity supplied to 3, also

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    A shortage occurs when the quantity demanded exceeds the quantity supplied, resulting in unmet demand. This is shown in the first graph where demand is 4 and supply is 2 at a price of $6, creating a shortage of 2 units. To resolve the shortage, suppliers raise prices to $10, lowering quantity demanded to 3 and raising quantity supplied to 3, restoring market equilibrium. A surplus occurs when quantity supplied exceeds quantity demanded, resulting in unsold excess units. This is shown in the second graph where supply is 4 and demand is 2 at a price of $14, creating a surplus of 2 units. To resolve the surplus, suppliers lower prices to $10, increasing quantity demanded to 3 and decreasing quantity supplied to 3, also

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    9 views2 pages

    Price Supply

    Uploaded by

    monasgurl
    A shortage occurs when the quantity demanded exceeds the quantity supplied, resulting in unmet demand. This is shown in the first graph where demand is 4 and supply is 2 at a price of $6, creating a shortage of 2 units. To resolve the shortage, suppliers raise prices to $10, lowering quantity demanded to 3 and raising quantity supplied to 3, restoring market equilibrium. A surplus occurs when quantity supplied exceeds quantity demanded, resulting in unsold excess units. This is shown in the second graph where supply is 4 and demand is 2 at a price of $14, creating a surplus of 2 units. To resolve the surplus, suppliers lower prices to $10, increasing quantity demanded to 3 and decreasing quantity supplied to 3, also

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    2.d.

    Shortages and Surpluses


    A shortage occurs when the quantity demanded is greater than the quantity supplied.
    Price

    Supply

    Market Equilibrium
    $10
    Shortage of 2

    $6

    Demand

    Quantity
    (Pizza)

    2.d.1. According to the graph above, the market equilibrium is when the price is $10 and the quantity demanded is 3.
    However, at a price of $6, the quantity of pizza demanded is 4 and the quantity of pizza supplied is only 2. This
    means that the suppliers are willing to supply less pizza while buyers want more pizza because of the lower price.
    This causes a shortage of 2.
    Price

    Supply

    Market Equilibrium
    $10

    $6

    Demand
    Quantity
    (Pizza)
    2
    3
    4
    2.d.2. When shortages occur, and there are no price ceilings or floors, suppliers raise prices (from $6 to $10),
    causing the quantity demanded to move down on the demand curve (from 4 to 3), and quantity supplied to move up
    on the supply curve (from 2 to 3), until price and quantity is back at market equilibrium.

    A surplus occurs when the quantity supplied is greater than the quantity demanded.
    Price

    Supply

    Surplus of 2

    $14

    $10
    Market Equilibrium

    Demand

    Quantity
    (Pizza)

    2.d.3. According to the graph above, the market equilibrium is when the price is $10 and the quantity demanded is 3.
    However, at a price of $14, the quantity of pizza supplied is 4 and the quantity of pizza demanded is only 2. This
    means that the suppliers are willing to supply more pizza and the buyers are willing to buy less pizza because the
    prices are higher. This causes a surplus of 2.
    Price

    Supply

    $14

    $10
    Market Equilibrium

    Demand

    Quantity
    (Pizza)

    2.d.4. When surpluses occur, and there are no price ceilings or floors, suppliers lower prices (from $14 to $10),
    causing the quantity demanded to move up on the demand curve (from 2 to 3), and quantity supplied to move down
    on the supply curve (from 4 to 3), until price and quantity is back at market equilibrium.

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