Question

Table 1

Price	Quantity Demanded	Quantity Supplied
$10	10	60
$8	20	45
$6	30	30
$4	40	15
$2	50	0

1   Refer to Table 1. The equilibrium price and quantity, respectively, are

a.	$2 and 50.
b.	$6 and 30.
c.	$6 and 60.
d.	$12 and 30.

2. .   Refer to Table 1. If the price were $8, a

a.	shortage of 20 units would exist and price would tend to rise.
b.	surplus of 25 units would exist and price would tend to fall.
c.	shortage of 25 units would exist and price would tend to rise.
d.	surplus of 45 units would exist and price would tend to fall.

3.     Refer to Table 1 If the price were $4, a

a.	surplus of 15 units would exist and price would tend to fall.
b.	shortage of 25 units would exist and price would tend to rise.
c.	surplus of 25 units would exist and price would tend to fall.
d.	shortage of 40 units would exist and price would tend to rise.

Table 2

A country club usually only allows members to purchase tickets for its celebrity golf tournament, but the club is considering allowing non-members to purchase tickets this year. The demand and supply schedules are as follows:

Price	Quantity Demanded by Members	Quantity Demanded by Non-members	Quantity Supplied
$10	1000	500	600
$15	800	400	600
$20	600	300	600
$25	400	200	600
$30	200	100	600

4.     Refer to Table 2. If only members are allowed to purchase tickets to this year's celebrity golf tournament, then what will be the equilibrium price?

a.	$10
b.	$15
c.	$20
d.	$25

5.     Refer to Table 2 If both members and non-members are allowed to purchase tickets to this year's celebrity golf tournament, then what will be the equilibrium price?

a.	$10
b.	$15
c.	$20
d.	$25

Answer 1

1. Option b - $6 and 30

The equilibrium price and quantity is where the Quantity Demanded = Quantity Supplied. Here, at price $6, the Quantity Demanded = Quantity Supplied which is 30 units, hence the equilibrium price is $6 and the equilibrium quantity is 30.

2. Option b - surplus of 25 units would exist and price would tend to fall.

If the price were $8, the quantity demanded would be 20 units and the quantity supplied would be 45 units. So, the quantity supplied would exceed the quantity demanded by (45 - 20) which is 25 units. When there is a surplus quantity supplied than the quantity demanded, the price tends to fall so that there can be an equilibrium price where Quantity Demanded = Quantity Supplied.

3. Option b - shortage of 25 units would exist and price would tend to rise.

If the price were $4, the quantity demanded would be 40 units and the quantity supplied would be 15 units. So, the quantity demanded would exceed the quantity supplied by (40 - 15) which is 25 units. When there is a shortage of quantity demanded than the quantity supplied, the price tends to rise so that there can be an equilibrium price where Quantity Demanded = Quantity Supplied.

4. Option c - $20

If only members are allowed to purchase tickets to this year's celebrity golf tournament, then the equilibrium price will be $20, because at $20, the Quantity Demanded by Members = Quantity Supplied which is 600 units.

5. Option d - $25

If both members and non-members are allowed to purchase tickets to this year's celebrity golf tournament, then the equilibrium price will be $25, because at $25, the Quantity Demanded by Members = Quantity Supplied which is 600 units. At $25, the total quantity demanded here is Quantity Demanded by Members + Quantity Demanded by Non-Members, which is 400 + 200 equal to 600 units.