The table below contains information about the wheat market. Use it to answer the following questions:
Wheat Market
Price Per Bushel Quantity Demanded (bushels) Quantity Supplied (bushels)
$5 30,000 0
$7 26,000 4,000
$10 22,000 9,000
$14 18,000 12,000
$17 15,000 15,000
$20 12,000 22,000
$23 8,000 28,000
$28 4,000 36,000
- Plug the numbers in the chart into MS Excel and produce a Supply and Demand Chart, which you include with your answer sheet for submission.
- What are the equilibrium price and quantity of wheat?
- Suppose the prevailing price is $15 per bushel. Is there a shortage or a surplus in the market? Explain why.
- What is the quantity of the shortage or surplus? Show your calculations.
- How many bushels will be sold if the market price is $10 per bushel? Show calculations.
- If the market price is $14 per bushel, what must happen to restore equilibrium in the market? Explain.
- At what price will suppliers be able to sell 22,000 bushels of wheat? Explain what would have to happen.
- Suppose the market price is $25 per bushel. Is there a shortage or a surplus in the market? Why? Explain.
- What is the total quantity of the shortage or surplus?
- How many bushels will be sold if the market price is $24 per bushel?
- If the market price is $21 per bushel, what must happen to restore equilibrium in the market? Why should that happen?
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