Question

The table below gives the demand and supply schedules for cat food.

cat food.

Price

(dollars per pound of cat food)

Price(dollars per pound of cat food) / Quantity demanded(tons of cat food per year) / Quantity supplied (tons of cat food per year)

1.00    52 15
1.50    46    26
2.00 43 34
2.50 40 40
3.00 35 44
4.00 32 49
5.00 27 53

a. Illustrate the information given in the table with a demand and supply graph.

b. Refer the table above. If the price is $5.00 per pound of cat food, will there be a shortage, a surplus, or is this price the equilibrium price? If there is a shortage, how much is the shortage? If there is a surplus, how much is the surplus? Show this on the graph. How the market adjusts in a free market economy based on this condition.

c. Refer the table above. If the price is $1.50 per pound of cat food, will there be a shortage, a surplus, or is this price the equilibrium price? If there is a shortage, how much is the shortage? If there is a surplus, how much is the surplus? Show this on the graph. How the market adjusts in a free market economy based on this condition.

Answer 1