Demand Schedule of Hypothetical Demand and Supply Schedule of Rice in Million Metric Tons Per Year

Question:

Demand Schedule of

Hypothetical Demand and Supply Schedule
of Rice in Million Metric Tons Per Year
Qd Price Qs Surplus/Shortage
22 60 14
20 80 16
18 100 18
16 120 20
14 140 22
12 160 24

Base on the above data, answer the following questions.

a. Identify the equilibrium price and equilibrium quantity.

b. Compute the shortage and surplus and justify why your answer in letter (a)
above is correct.

c. Graph the demand and supply of rice using excel.

d.What is the elasticity of demand if the Price is 100? Interpret the result.
Identify the degree of responsiveness.

e.What is the elasticity of supply if the price is 120? Identify the degree of
responsiveness.


Answer:

A. EQUILIBRIUM
The equilibrium price for rice is 100.
The equilibrium quantity for rice is 18.

B. SHORTAGE/SURPLUS
Quantity Demanded Price Quantity Supplied Surplus/Shortage
22 60 14 Shortage: 8
20 80 16 Shortage: 4
18 100 18 0
16 120 20 Surplus: 4
14 140 22 Surplus: 8
12 160 24 Surplus: 12