Question

Qd1 Qd2 P Qs1 Qs2

20 40 $10 80 60

30 50 $9 70 50

40 60 $8 60 40

50 70 $7 50 30

60 80 $6 40 20

18. Which supply and demand combination(s) result in a surplus when the price is $8?_________________

19. Which supply and demand combination(s) result in a shortage when the price is $8?_________________   

20. Which supply and demand combination(s) result in an equilibrium when the price is $8?_________________

Answer 1

18 At P = 8

Q₁^d = 40 Q₁^s = 60

since    Q₁^s > Q₁^d this means surplus  

surplus =   Q₁^s -   Q₁^d = 60 - 40 = 20

so  Q₁^d = 40 and Q₁^s = 60 is the demand and supply combination results in surplus

19)

Q₂^d = 60 Q₂^s = 40

since Q₂^d >  Q₂^s implies shortage

shortage =   Q₂^d - Q₂^s = 60 - 40 = 20  

so   Q₂^d = 60 Q₂^s = 40 is the demand and supply combination results in shortage

20)

At P = 8  

Q₁^d = 40

  Q₁^s = 60

  Q₂^d = 60

Q₂^s = 40  

At equilibrium demand = supply  

so   Q₁^d = 40 = Q₂^s (equilibrium ) so  Q₁^d ,  Q₂^s is the demand and supply combination that results equilibrium

now   Q₂^d = 60 =   Q₁^s   (equilibrium ) thus  Q₂^d ,  Q₁^s  is the demand and supply combination that results equilibrium