Question

Suppose that in a recent market period, the following relationship existed between the price of blood glucose meters and the quantity supplied and quantity demanded:

Quantity Demanded	Price	Quantity Supplied
0	$50	80,000
10,000	$45	70,000
20,000	$40	60,000
30,000	$35	50,000
40,000	$30	40,000
50,000	$25	30,000
60,000	$20	20,000
70,000	$15	10,000
80,000	$10	0

A. What are the equilibrium price and quantity?

B. If the industry price is $25, is there a shortage or surplus of blood glucose meters? Please explain.

C. If the industry price is $35, is there a shortage or surplus of blood glucose meters? Please explain.   

Answer 1

Answer
A)
the equilibrium is at
quantity demanded =quantity supplied
it is at Q=40000
where
P=$30
the equilibrium price is $30 and quantity is 40000 units
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B)
P=$25
Qd=50000 and Qs=30000
Qd>Qs means there is a shortage, as the quantity demanded is higher than the quantity supplied.
shortage =Qd-Qs=50000-30000=20000
the shortage is 20000 units

C)
P=35
Qd=30000 and Qs=50000
Qs>Qd means there is a surplus of goods in the market as the quantity supplied is higher than the quantity demanded
surplus =Qs-Qd=50000-30000=20000
the surplus is 20000 units