Market Equilibrium What are some items that experience a Explain how changes in demand and market surplus: Explain why. supply affect equilibrium price and equilibrium quantity. What are some items that experience a market shortage: Explain why. The AP Exam has several Free Response Questions. Here is an example from Unit 1. Answer all a arts of this - uestion eeper D we Assume gasoline is sold in a competitive market, the equilibrium price is $50 per barrel, and the equilibrium quantity is 1000 barrels. R :6 F0 (1 d (a) Using the numerical value above, draw a correctl labele the gasoline market and show each of the following: (i) The equilibrium price (ii) The equilibrium quantity (b) At a price of $40 per barrel, with there be a surplus or a shortage in the market. Explain. (0) Assume new oil wells are discovered. On your graph from part (a), show how this change will affect the equilibrium price and quantity in the market for gasoline. (d) Assume instead there is an increase in the price of gasoline operated automobiles. How will this change affect the market for gasoline. Explain. (e) if both changes in part (c) and part (d) occurred simultaneously, what will happen to the equilibrium price and quantity of gasoline? graph of