Price (RM) Quantity demanded (tonnes) Quantity supplied (tonnes) 1 90 30 2 75 45 3 60...

Price (RM)	Quantity demanded (tonnes)	Quantity supplied (tonnes)
1	90	30
2	75	45
3	60	60
4	45	75
5	30	90
6	15	105

(a) What is the equilibrium price and quantity? [4 marks] (b) Calculate the revenue received by the seller at equilibrium. [4 marks] (c) Due to medical journals reporting that wheat is good for health, the quantity demanded is increased by 30 tonnes. (i) Calculate the new quantity demanded. [2 mark] (ii) What is the new equilibrium price and quantity? [4 marks] (d) Calculate the new revenue. Did the revenue increase or decrease? [6 marks]

Expert Solution

(a) Plotting the graph can be a way to find out the equilibrium price and quantity, as is shown below, but there is a more precise way in this situation that can be used without making a graph. The equilibrium price and quantity occurs at where equilibrium quantity demanded is equal to the equilibrium quantity supplied. As from the table, we can see that at price 3, this happens, and for any other price, the quantity demanded either exceeds or is less than quantity supplied.

Hence, the equilibrium price is $3, and equilibrium quantity is 60 tonnes.

(b) The total revenue recieved is , and as equilibrium price is $3 and the equilibrium quantity demanded and sold is 60 tonnes, the total revenue received is dollars.

(c) (i) If quantity demanded is increased by 30 tonnes, it refers to increase in quantity demanded by 30 tonnes for every price. The table is as below.

Price (RM)	New Quantity demanded (tonnes)	Quantity supplied (tonnes)
1	120	30
2	105	45
3	90	60
4	75	75
5	60	90
6	45	105

(ii) The new equilibrium price and quantity is where the new quantity demanded is equal to the quantity supplied, which is occuring at price 4. Hence, equilibrium quantity is 75 tonnes, and equilibrium price is $4.

(d) The new revenue of sellers is dollars, and has increased.

Rahul Sunny answered 2 years ago

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