a. What is the equilibrium price of avocados for this market? b. What is the equilibrium quantity exchanged in this market? c. If the price is fixed at $3, would it cause a surplus or a shortage of avocados? d. How large would this disequilibrium (ie. the shortage or the surplus) be? e. What would happen to the size of the disequilibrium (surplus or shortage, whichever you indicated existed in c) if the demand increases? f. Recent fires in California are likely to decrease the amount of avocados available to this market. In the graph, show how this would affect market supply curve. g. In a free market where prices adjust in response to market forces, what would be expected to happen to the price of avocados given this change in supply? Supply 6. Demand 1. 200 400 600 800 1000 1200 Quantity (millions per year) Price (S)
a. What is the equilibrium price of avocados for this market? b. What is the equilibrium quantity exchanged in this market? c. If the price is fixed at $3, would it cause a surplus or a shortage of avocados? d. How large would this disequilibrium (ie. the shortage or the surplus) be? e. What would happen to the size of the disequilibrium (surplus or shortage, whichever you indicated existed in c) if the demand increases? f. Recent fires in California are likely to decrease the amount of avocados available to this market. In the graph, show how this would affect market supply curve. g. In a free market where prices adjust in response to market forces, what would be expected to happen to the price of avocados given this change in supply? Supply 6. Demand 1. 200 400 600 800 1000 1200 Quantity (millions per year) Price (S)
Chapter4: Demand, Supply, And Market Equilibrium
Section: Chapter Questions
Problem 25P
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Refer to the Graph of
Transcribed Image Text:a. What is the equilibrium price of avocados for this market?
b. What is the equilibrium quantity exchanged in this market?
c. If the price is fixed at $3, would it cause a surplus or a shortage of avocados?
d. How large would this disequilibrium (ie. the shortage or the surplus) be?
e. What would happen to the size of the disequilibrium (surplus or shortage, whichever
you indicated existed in c) if the demand increases?
f. Recent fires in California are likely to decrease the amount of avocados available to this
market. In the graph, show how this would affect market supply curve.
g. In a free market where prices adjust in response to market forces, what would be
expected to happen to the price of avocados given this change in supply?
Transcribed Image Text:Supply
6.
Demand
1.
200
400
600
800
1000
1200
Quantity (millions per year)
Price (S)
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