a. What is the equilibrium price of avocados for this market? b. What is the equilibrium quantity exchanged in this market? c. If the price is fixed at $3, would it cause a surplus or a shortage of avocados? d. How large would this disequilibrium (ie. the shortage or the surplus) be? e. What would happen to the size of the disequilibrium (surplus or shortage, whichever you indicated existed in c) if the demand increases? f. Recent fires in California are likely to decrease the amount of avocados available to this market. In the graph, show how this would affect market supply curve. g. In a free market where prices adjust in response to market forces, what would be expected to happen to the price of avocados given this change in supply? Supply 6. Demand 1. 200 400 600 800 1000 1200 Quantity (millions per year) Price (S)

a. What is the equilibrium price of avocados for this market? b. What is the equilibrium quantity exchanged in this market? c. If the price is fixed at $3, would it cause a surplus or a shortage of avocados? d. How large would this disequilibrium (ie. the shortage or the surplus) be? e. What would happen to the size of the disequilibrium (surplus or shortage, whichever you indicated existed in c) if the demand increases? f. Recent fires in California are likely to decrease the amount of avocados available to this market. In the graph, show how this would affect market supply curve. g. In a free market where prices adjust in response to market forces, what would be expected to happen to the price of avocados given this change in supply? Supply 6. Demand 1. 200 400 600 800 1000 1200 Quantity (millions per year) Price (S)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Refer to the Graph of supply and demand for avacodoes to answer the following questions:

a. What is the equilibrium price of avocados for this market?
b. What is the equilibrium quantity exchanged in this market?
c. If the price is fixed at $3, would it cause a surplus or a shortage of avocados?
d. How large would this disequilibrium (ie. the shortage or the surplus) be?
e. What would happen to the size of the disequilibrium (surplus or shortage, whichever
you indicated existed in c) if the demand increases?
f. Recent fires in California are likely to decrease the amount of avocados available to this
market. In the graph, show how this would affect market supply curve.
g. In a free market where prices adjust in response to market forces, what would be
expected to happen to the price of avocados given this change in supply?

Supply
6.
Demand
1.
200
400
600
800
1000
1200
Quantity (millions per year)
Price (S)

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