Women in Empirical Microeconomics Conference

Running head: Microeconomics
Microeconomics
Name of the Student
Name of the University
Student ID

Microeconomics1
Table of Contents
Answer 1..........................................................................................................................................2
Answer 2..........................................................................................................................................5
Answer 3..........................................................................................................................................7
Reference.......................................................................................................................................10

Microeconomics2
Answer 1
(a)
Graph 1: Banana market equilibrium
Source: (Created by the Author)
The equilibrium price and quantity are $2.5 and 2250 boxes respectively. Equilibrium in
a market is decided at the point where total amount of quantity demanded is equal to the total
amount of quantity supplied (Tian 2016). The price and quantity traded in the market at this
point is thus regarded as equilibrium price and quantity.
(b) The market for banana would have faced excess demand if the price of banana becomes
$1.50 a box because this price is below the level of equilibrium price $2.5 of the market. Thus,
the supply is lower than the demand (Basu and Pak 2016). Thus, the firms will increase their
price to gain more revenue and the quantity of banana traded. Thus, both the price and quantity
will increase in the market.
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Banana Market
Quantity demanded (boxes per week)
Quantiy supplied (boxes per week)
Quantity
Price

Microeconomics3
(c)
Diagram 2: Fall in supply in banana market
Source: (Created by the Author)
Due to cyclone, the supply of banana has declined. The amount of fall in supply per week
is 500 boxes. As a result, the supply curve shifted to the left and thereby the price of banana
increased. After fall in supply, the equilibrium price and quantity of the banana market is $3 and
2000 boxes per week.
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Banana Market After Decrease in Supply
Quantity demanded
(boxes per week)
Quantiy supplied
(boxes per week)
Decreased supply
(boxes per week)
Quantity
Price