hwa2 - b Graph the demand for wheat and the supply of wheat...

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ECON 201 – HWA 2 3-8 ( Key Question ) Suppose the total demand for wheat and the total supply of wheat per month in the Kansas City grain market are as follows: Thousands of bushels demanded Price per bushel Thousand of bushels supplied Surplus (+) or shortage (-) 85 80 75 70 65 60 $3.40 3.70 4.00 4.30 4.60 4.90 72 73 75 77 79 81 _____ _____ _____ _____ _____ _____ a. What is the equilibrium price? What is the equilibrium quantity? Fill in the surplus- shortage column and use it to explain why your answers are correct.
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Unformatted text preview: b. Graph the demand for wheat and the supply of wheat. Be sure to label the axes of your graph correctly. Label equilibrium price P and the equilibrium quantity Q . c. Why will $3.40 not be the equilibrium price in this market? Why not $4.90? “Surpluses drive prices up; shortages drive them down.” Do you agree?...
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