poses this market, area A represents O A. total economic surplus.

If the price is above line equilibrium level, would you predict a surplus or a shortage? If line price is below the equilibrium level, would you predict a surplus or a shortage? Why?

Table 3.8 shows information on the demand and supply for bicycles, where the quantities of bicycles are measured in thousands. What is the quantity demanded and the quantity supplied at a price of 210? At what price is the quantity supplied equal to 48,000? Graph the demand and supply curve for bicycles. How can you determine the equilibrium price and quantity from the graph? How can you determine the equilibrium price and quantity from line table? What HIE die equilibrium price and equilibrium quantity? If the price was 120, what would the quantities demanded and supplied he? Would a shortage or surplus exist? If so, how large would the shortage or surplus he?

What is consumer surplus? How is it illustrated on a demand and supply diagram?

What is the relationship between total surplus and economic efficiency?

Why would a free market mar operate at a quantity greater than the equilibrium quantity? Hint: What would be required for at transaction to occur at that quantity?