FIGURE 3.6 Equilibrium price and quantity. The intersection of the downsloping demand curve D and the upsloping supply curve S indicates the equilibrium price and quantity, here $3 and 7000 bushels of corn. The shortages of corn at below-equilibrium prices (for example, 7000 bushels at $2) drive up price. The higher prices increase the quantity supplied and reduce the quantity demanded until equilibrium is achieved. The surpluses caused by above-equilibrium prices (for example, 6000 bushels at $4) push price down. As price drops, the quantity demanded rises and the quantity supplied falls until equilibrium is established. At the equilibrium price and quantity, there are neither shortages nor surpluses of corn. $6 Market Supply of and Demand for Corn (1) (3) Total S Total (2) Price (4) Surplus (+) 5 6000-bushel Quantity Supplied per Week Quantity surplus per Demanded or Bushel per Week Shortage (-)* 12,000 $5 2,000 +10,000 V 10,000 4 4,000 +6,000 7,000 7,000 4,000 2 11,000 -7,000 1,000 16,000 - 15,000 ↑ 7000-bushel *Arrows indicate the effect on price. shortage 2 4 6 7 8 10 12 14 16 18 Bushels of corn (thousands per week) Price (per bushel)
FIGURE 3.6 Equilibrium price and quantity. The intersection of the downsloping demand curve D and the upsloping supply curve S indicates the equilibrium price and quantity, here $3 and 7000 bushels of corn. The shortages of corn at below-equilibrium prices (for example, 7000 bushels at $2) drive up price. The higher prices increase the quantity supplied and reduce the quantity demanded until equilibrium is achieved. The surpluses caused by above-equilibrium prices (for example, 6000 bushels at $4) push price down. As price drops, the quantity demanded rises and the quantity supplied falls until equilibrium is established. At the equilibrium price and quantity, there are neither shortages nor surpluses of corn. $6 Market Supply of and Demand for Corn (1) (3) Total S Total (2) Price (4) Surplus (+) 5 6000-bushel Quantity Supplied per Week Quantity surplus per Demanded or Bushel per Week Shortage (-)* 12,000 $5 2,000 +10,000 V 10,000 4 4,000 +6,000 7,000 7,000 4,000 2 11,000 -7,000 1,000 16,000 - 15,000 ↑ 7000-bushel *Arrows indicate the effect on price. shortage 2 4 6 7 8 10 12 14 16 18 Bushels of corn (thousands per week) Price (per bushel)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Refer to Figure 3.6, page 55. Assume that the graph depicts the U.S. domestic market for corn. How many bushels of corn, if any, will the United States export or import at a world
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