1. Supply and Demand Schedules for a One Pound Container of Guacamole

Price Quantity Supplied Quantity Demanded

$5.00 30,000 120,000

$6.00 40,000 100,000

$7.00 50,000 80,000

$8.00 60,000 60,000

$9.00 70,000 40,000

1. Graph the supply and demand schedules in a supply curve and demand curve,

respectively, on one graph.

2. What are the equilibrium price and quantity in this market?

3.Solve for the numerical value of total revenue at the point of equilibrium.

4. Show on your graph from part a and explain how the recent, short-lived ban on

Mexican imports of avocados (an ingredient in guacamole) affected the market for

guacamole while the ban was in effect. Explain why you shifted the curve (only

one will shift) that you did in the direction that you did. Label what you shifted as

A.

5. Solve for the price elasticity of demand between the prices of $6.00 and $7.00. When answering this question, round your Ed value to four decimal places.

6. Based upon the price elasticity of demand value solved for in part 5, would this

value be classified as elastic, inelastic, or unit elastic?

7. If we were to measure the income elasticity of demand for guacamole, would the

value be positive or negative? If positive, would it be greater than 1, equal to 1, or

less than 1? Explain.

8. Based upon the data provided at the beginning of this question, at the price of

$6.00, does there exist a shortage or surplus of the guacamole in the market? State

the size of the shortage or surplus at this price.