Imagine that you have opened a small business in yourschool selling Italian ices. You make the ices from freshfruit – lemons, oranges, blueberries and cherries - using afamily recipe that your grandfather has passed along. Youare concerned about the price you pay for the fruit, as theprice you pay for the ingredients is reflected in the priceyou charge your customers, and you are aware that there isa limit to what your customers are willing to pay. Althoughyou would like to offer variety to your customers, if theprice of any of the fruits becomes too high, you will cutback on your purchases, and offer less of that flavor to yourcustomers. The quantity of lemons you are willing topurchase at various prices per bushel is presented in thetable below.The lemon supplier obtains lemons directly from growersin Al Ain and has a variety of customers that includerestaurants, supermarkets and fruit vendors.The quantity of lemons you are willing to purchase and thequantity of lemons the supplier is willing to offer at variousprices per bushel are presented in the table below:Quantity supplied(S)Price per bushelQuantitydemanded (D).$402060$323050$244040$165030$86020 Exercise 1: For each price per bushel in the table:• Indicate whether there is a shortage (quantitydemanded > quantity supplied) or a surplus (quantitysupplied > quantity demanded)• Indicate the amount of the shortage or surplus,• Draw a graph and indicate the equilibrium on thegraph. What is the EQ price?Supply of Part Time Workers3530252015105.50010001500200025003000Quantity of Part Time HoursSupply of Part Time Workers35302520151015002000250030005001000Quantity of Part Time HoursQuantity supplied Surplus orshortageAmountQuantitydemanded-(B)Price per bushel$402060$323050$244040$165030$86020Hourly Rates

Price of Bushels Quantity Demanded Quantity Supplied Surplus or Shortage Amount 40 20 60 Surplus…

• Indicate whether there is a shortage (quantity demanded > quantity supplied) or a surplus (quantity supplied > quantity demanded) • Indicate the amount of the shortage or surplus. • Draw a graph and indicate the equilibrium on the graph. What is the EQ price?

• Indicate whether there is a shortage (quantity demanded > quantity supplied) or a surplus (quantity supplied > quantity demanded) • Indicate the amount of the shortage or surplus. • Draw a graph and indicate the equilibrium on the graph. What is the EQ price?

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter4: Supply And Demand: An Initial Look

Section: Chapter Questions

Problem 4TY: The following table summarizes information about the market for principles of economics textbooks:...

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Similar questions

Whether the product market or the labor market, what happens to line equilibrium price and quantity for each of the four possibilities: increase in demand, decrease in demand, increase in supply; and decrease in supply.
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price ceiling cause a shortage?
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