Chapter 4, Problem 6.12P

To determine

The market equilibrium.

Introduction:

Market surplus: When supply is more in the market than demand of the commodity, this excess supply is known as market surplus.

Market shortage: When supply is less in the market than demand of the commodity, this excess demand or shortage in supply is known as market shortage.

Market equilibrium: Market equilibrium is the situation when there is no shortage or excess demand, there is no surplus or excess supply which implies quantity supplied equals quantity demanded. Anyone who wants to buy at the current price can and all producers who want to sell at that price can.