Problem 1: Market Balance & Change in Demand and Supply

a. The following data reflects what happens in the market for pizzas from one store per week:

Price ($)	Quantity Supplied	Quantity Demanded
12	100	300
14	200	200
16	300	100

1. Describe the behavior of the pizza market if the price of the product is $12 per pizza and then if the price is $16. Indicate with a graph where an excess or a shortage of product is generated and how the market solves it.

b. The following table presents the supply and demand plans for french fries per week:

Price (cents/bag)	Quantity Demanded	Quantity Supplied
50	160	130
60	150	140
70	140	150
80	130	160
90	120	170
100	110	180

1. Sketch a graph of the market for french fries and determine the equilibrium price and quantity.

2. Describe the market situation for french fries and explain how the price adjusts if the product costs 60 cents a bag.

3. If a new dressing increases the quantity of french fries demanded by 30,000 bags per week at each price, what will be the new equilibrium point, that is, the price and quantity of french fries with the new data?

4. If a virus destroys the crops used to make french fries and the quantity supplied decreases by 40,000 bags per week at each price, what will be the new equilibrium point, that is, the price and quantity of french fries with the new data?

5. If the above two changes were to occur simultaneously, how would the price and quantity of french fries change? In this part you must use the values of demand and supply that are obtained after the changes in the market.