Demand, supply and the determination of market price
1. For a particular week in June, three families - Smith, Jones and Brown - have the demand schedule for strawberries shown below. Assuming these three families comprise the whole market, calculate the market demand for strawberries and plot it on a graph. On the same graph plot the supply function using the data in column A. What are the equilibrium price and equilibrium quantity?
Now suppose that favourable weather conditions produce a bumper crop. Growers will be willing to sell more at each of the old prices. This causes a shift of the whole supply function. Plot this new supply function from the data in column B. What are the new equilibrium price and quantity?