KEY QUESTION Suppose the total demand for wheat and the total supply of wheat per month in the Kansas City grain market are as shown in the accompanying table.

a. What is the equilibrium price? What is the equilibrium quantity? Fill in the surplus-shortage column and use it to explain why your answers are correct.

b. Graph the demand for wheat and the supply of wheat.

Be sure to label the axes of your graph correctly. Label equilibrium price P and equilibrium quantity Q.

c. Why will $3.40 not be the equilibrium price in this market? Why not $4.90? “Surpluses drive prices up;

shortages drive them down.” Do you agree?