Question-   Equilibrium Quantity and Price of Wheat

Solution-

Assignment 1- 

Term Winter 2021 Student Name: ID 1. The following supply and demand schedules describe a hypothetical Canadian market for Wheat. Price ($ per tonne) Quantity Supplied (million tonnes) Quantity Demanded (million tonnes) 280 8.5 12.5 300 9.0 11.0 320 9.5 9.5 340 10.0 8.0 360 10.5 6.5 380 11.0 5.0 a. What is the equilibrium price and quantity of wheat? Equilibrium price is $320 and equilibrium quantity is 9.5 million tonnes of wheat. b. How much wheat would actually be purchased if the price was $300 per tonne? At price $300, actual purchased is 9.0 million tonnes of wheat. c. How much wheat would actually be sold if the price was $380 per tonne? At price $380, actual sold of wheat is 5.0 million tonnes d. At a price of $300 per tonne, is there excess supply or demand? How much? At price $300, there will be access demand / shortage of 2 million tonnes of wheat. e. At a price of $380 per tonne, is there excess supply or demand? How much? At price $ 380 per tonnes, there will be surplus/access supply of 6 million tonnes f. If the price is $280 per tonne, describe the forces that will cause the price to change. Firms will increase prices of wheat. g. If the price is $360 per tonne, describe the forces that will cause the price to change. Firms will decrease prices of wheat. 2. For each of the following statements, determine whether there has been a change in: Supply (S) or Demand (D) or a change in quantity supplied (QS) or change in quantity demanded (QD). Draw a demand-and-supply diagram for each situation to show either a movement along the Supply curve or Demand curve or a Shift of the supply curve or Demand Curve. a. World Wheat: Bad weather destroys wheat crop in Canada and the US. Answer: Wheat Market Price Quantity Demanded and Supplied b. World Wheat: World population is growing by over 2 million people per week. Answer: Wheat Market Price Quantity Demanded and Supplied c. Apples: The wages of apple pickers increase due to government legislation. Answer: Apple Market Price Quantity Demanded and Supplied d. Apples: Tsunami in Apple growing countries hurt apple production. Answer: Apple Market Price Quantity Demanded and Supplied e. Beef: The price of grass (cattle food) rises due to dry weather (drought). Answer: Beef Market Price Quantity Demanded and Supplied f. Beef: An outbreak of the disease Listeria is linked to pork. Answer: Beef Market Price Quantity Demanded and Supplied g. Technological improvements in electronic publishing lead to price reductions for e-books and an increase in e-book sales. Price Quantity Demanded and Supplied h. A low-carb diet becomes popular and leads to a reduction in the price of bread and less bread being sold. Price Quantity Demanded and Supplied 3. The following diagram describes the hypothetical demand and supply for canned tuna in Canada in 2016. a. Suppose the price of a can of tuna is $4.00. What is the quantity demanded? What is the quantity supplied? At this price, is there a shortage or a surplus? By what amount? Qd= 2, Qs= 8, Surplus of 6 million of cans. b. Suppose the price of a can of tuna is $1.50. What is the quantity demanded? What is the quantity supplied? At this price, is there a shortage or a surplus? By what amount? Qd= 12, Qs= 3, Shortage of 9 million of cans c. What is the equilibrium price and quantity in this market? Ep = 3 and Eq = 6 d. If demand increase from 6 million cans to 8 million cans and supply decrease from 6 million cans to 4 million cans. What will be the effect on equilibrium quantity and equilibrium price? Equilibrium Price = $3.50 Equilibrium Quantity = 5.2 million cans approx

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