5.Suppose that the total market demand for wheat and the total market supply of wheat per month in the

Kansas City grain markets are as follows:

ThousandsPrice ThousandsSurplus (+)

of Bushelsperof Bushelsor Shortage (-)

demandedBushelSuppliedand Amount

1000$6.50700___________

950$7.00750___________

900$7.50800___________

850 $8.00850___________

800$8.50900___________

750$9.00950___________

a.What will be the market (equilibrium) price?What is the equilibrium quantity?

b.Fill in the amount of the surplus or shortage and indicate whether there is a surplus (+) or a shortage (-).

6.Use the following graph, which shows the local market demand and supply curves for lobsters, to answer

the questions below the graph:

Price DS

$12--------------------------

9----------------------

6---------------------------------

3--------------------------------------------

0

200400600800Quantity (pounds)

a.What is the equilibrium price and what is the equilibrium quantity?P =$ ____Q =_______ pounds

b.At a price of $12, is there a surplus or shortage of lobsters, and how much is the surplus or shortage?

Surplus or Shortage?_______________How much? ____________

c.At a price of $3, is there a surplus or shortage of lobsters, and how much is the surplus or shortage?

Surplus or Shortage?_______________How much? ____________

7. Show how each of the following changes in demand and/or supply affects equilibrium

price and equilibrium quantity in a competitive market by first drawing the appropriate

curve shift or shifts.Then state specifically whether price and quantity increase, decrease,

or are indeterminate.

(a)DS(b)DS(c)DS(d)DS

PP P P

QQQQ

Supply decreases,Demand increases,Supply increases,Demand decreases,

Demand constantSupply constantDemand constantSupply constant

Price __________Price ___________Price __________Price ___________

Quantity __________ Quantity ___________Quantity ___________Quantity ___________

(e)DS (f)DS(g)DS(h)DS

P P PP

QQ QQ

Demand increases,Demand decreases,Demand increases,Demand decreases,

Supply increasesSupply decreasesSupply decreases Supply increases

Price__________Price ___________Price ___________Price ___________

Quantity ___________Quantity ____________Quantity ___________Quantity _________

8. Use the following graph, which represents the demand and supply conditions in the market for milk, to

answer the questions listed to the right of the graph.

PriceDSa.Suppose that the government decides that the $4 price per

gallon for milk is too low for the farmers and imposes a

a floor price of $4.50 on milk.What are the effects of this

$4action?_______________________________________

b.Draw the price support on the graph and indicate the

shortage or surplus that results from this action.

10

(gallons, millions)

9. Use the following graph, which represents the demand and supply conditions in the market for gasoline, to

answer the questions listed to the right of the graph.

PriceDSa.Suppose that the federal government decides that

gasoline prices are too high for consumers and

imposes a ceiling price of $4.00 on it.What are the

4.50effects of this ceiling price? ___________________

__________________________________________

b.Draw the ceiling price on the graph and indicate the

shortage or surplus that results from this action.

50(gallons, millions)

Suppose that the federal government decides that gasoline prices are too high for consumers and imposes a ceiling price of $4.00 on it.What are the effects of this ceiling price? ___________________