Question: Suppose that in a recent market period, an industry-wide survey determined the following relationship between the price of CD and the quantity supplied and quantity demanded.
|
Price Per CD
|
Quantity of CDs Demanded per Month
|
Quantity of CDsSupplied per Month
|
|
$20
|
500
|
9,000
|
|
$18
|
1,000
|
6,000
|
|
$16
|
1,500
|
4,500
|
|
$14
|
2,000
|
3,500
|
|
$12
|
2,500
|
2,500
|
|
$10
|
3,000
|
1,500
|
|
$8
|
3,500
|
800
|
|
$6
|
4,000
|
100
|
Answer the following questions from the above table:
(a) What are the equilibrium price and quantity of CDs?
(b) If the industry price per CD is $16, will there be shortage or surplus of CDs? How much is the shortage or surplus?
(c) At what price will there be an excess quantity demanded of 2700 CDs?