Use the schedule to answer the follow-ing questions:
Price per annum
Quantity Demanded
Quantity Supplied per week
5
500
60
6
400
150
7
300
300
8
250
400
9
150
500
10
50
600
(a) At what price and quantity does the market attain equilibrium and why? (b) At what prices does the market exhibit excess demand and by how many units? (c) At what prices does the market exhibit excess supply and by how many units? (d) At what price will the supplier be willing to sell most? What quantity will he be willing to sell at that
Explanation
(a) Equilibrium price N7 Equilibrium quantity 300 Units Because at that price quantity demanded is equal to quantity supplied (b) Excess demand arises at prices N5 and N6 At N5 = 500, 60 = 440 units