Label the axes and indicate for each axis the units being used to measure price and quantity.
Then answer the questions.
Quantity demanded Quantity supplied
Price (bushels of oats) Price (bushels of oats)
$1.50 10,000 $1.50 40,000
1.40 15,000 1.40 35,000
1.30 20,000 1.30 30,000
1.20 25,000 1.20 25,000
1.10 30,000 1.10 20,000
1.00 35,000 1.00 15,000
(a) Give the equilibrium price and quantity for oats.
(b) Indicate the equilibrium price and quantity on the graph by drawing lines from the intersection of the supply and demand curves to the price and quantity axes.
(c) If the Federal government decided to support the price of oats at $1.40 per bushel, tell whether there would be a surplus or shortage and how much it would be.
(d) Demonstrate your answer to part (c) on your graph being sure to label the quantity you designated as the shortage or surplus.