The following demand and supply schedules are for bushels of apples in a local market. Price Quantity Demanded Quantity Supplied $20 200 1,000 $18 400 800 $16 600 600 $14 800 400 $12 1,000 200

a. What are the equilibrium price and quantity of apples?

b. At a price of $20, is there a shortage or surplus of apples? How much of a surplus or shortage is there?

c. At a price of $12, is there a shortage or surplus of apples? How much of a surplus or shortage is there?

Part A:

Equilibrium price=$16

Equilibrium Quantity=600

Part B:

Surplus by amount 800.

Part C:

Shortage by 800

Explanation:

Part A:

Equilibrium Price is where demand is equal to the supply so at $16 both demand and supply is equal i. e 600.

Part B:

At $20, the quantity of apples supplied is 1000 and demand is 200 so it is the surplus of 800 apples.

Surplus Quantity = Supplied - Demand

Surplus Quantity=1000-200=800 apples

Part C:

At $12, the quantity supplied is 200 apples but the demand is 1000 so there is a shortage of 800 apples.

Shortage=Supplied - Demand

Shortage quantity=200-1000=-800 apples (-ve for shortage)