Question

1. Suppose that in a recent market period, the following relationship existed between the price of Blu-ray discs and quantity supplied and quantity demanded.

Price                                                   Quantity Demanded           Quantity Supplied

$19	100 million	40 million
$20	90	60
$21	80	80
$22	70	100
$23	60	120

Graph the supply and demand curves for Blu-ray discs using the information in the table. Use the computer to draw your graph. What are the equilibrium price and quantity? If the industry price is $20, is there a shortage or surplus of Blu-ray discs? How much is the shortage or surplus?

Answer 1

Equilibrium price = 21

Equilibrium quantity = 80 million

When industry price is 20, QD = 90 and QS=60 so there is a shortage of 90-60=30 million units