Questions: Chapter 04 Homework 12. Market equilibrium and disequilibrium The following graph shows the monthly demand and supply curves in the market for combs. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. The equilibrium price in this market is per comb, and the equilibrium quantity is combs per month. Complete the following table by indicating at each price whether there is a shortage or surplus in the market, the amount of that shortage or surplus, and whether this places upward or downward pressure on prices.

Chapter 04 Homework 12. Market equilibrium and disequilibrium The following graph shows the monthly demand and supply curves in the market for combs. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. The equilibrium price in this market is per comb, and the equilibrium quantity is combs per month. Complete the following table by indicating at each price whether there is a shortage or surplus in the market, the amount of that shortage or surplus, and whether this places upward or downward pressure on prices.
Transcript text: Chapter 04 Homework 12. Market equilibrium and disequilibrium The following graph shows the monthly demand and supply curves in the market for combs. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. The equilibrium price in this market is $\square$ per comb, and the equilibrium quantity is $\square$ combs per month. Complete the following table by indicating at each price whether there is a shortage or surplus in the market, the amount of that shortage or surplus, and whether this places upward or downward pressure on prices.
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Solution

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Solution Steps

Step 1: Identify the Equilibrium Price and Quantity
  • The equilibrium price and quantity occur where the demand and supply curves intersect.
  • From the graph, the demand and supply curves intersect at a price of $6 per comb and a quantity of 500 combs per month.
Step 2: Determine Shortage or Surplus at Different Prices

  • At a price of $12 per comb:

    • Quantity demanded: 200 combs
    • Quantity supplied: 800 combs
    • Surplus: 800 - 200 = 600 combs
    • Pressure: Downward (since there is a surplus)

  • At a price of $4 per comb:

    • Quantity demanded: 600 combs
    • Quantity supplied: 300 combs
    • Shortage: 600 - 300 = 300 combs
    • Pressure: Upward (since there is a shortage)
Step 3: Fill in the Table

  • For $12 per comb:

    • Shortage or Surplus: Surplus
    • Amount: 600 combs
    • Pressure: Downward

  • For $4 per comb:

    • Shortage or Surplus: Shortage
    • Amount: 300 combs
    • Pressure: Upward

Final Answer

  • Equilibrium price: $6 per comb
  • Equilibrium quantity: 500 combs per month
  • At $12 per comb: Surplus of 600 combs, Downward pressure
  • At $4 per comb: Shortage of 300 combs, Upward pressure
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