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Briefly answer each question based on Table 1-2.
Table 1-2.
Price per bushel Quantity Demanded (bushels) Quantity Supplied(bushels)
$2 40,000 0
4 36,000 4,000
6 30,000 8,000
8 24,000 16,000
10 20,000 20,000
12 18,000 28,000
14 12,000 36,000
16 6,000 40,000

a. What is the equilibrium price and quantity of sorghum?
b. Suppose the prevailing price is $6 per bushel. Is there ashortage or a surplus in the
market?
c. What is the quantity of the shortage or surplus?
d. How many bushels will be sold if the market price is $6 perbushel?
e. If the market price is $6 per bushel, what must happen to restoreequilibrium in the
market?
f. At what price will suppliers be able to sell 36,000 bushels ofsorghum?
g. Suppose the market price is $14 per bushel. Is there a shortageor a surplus in the
market?
h.What is the quantity of the shortage or surplus?
i. How many bushels will be sold if the market price is $14 per bushel?
j. If the market price is $14 per bushel, what must happen torestore equilibrium in the market?

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Anne Gillian Duero
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Related questions

Price per Bushel Quantity Demanded(bushels) Quantity Supplied(bushels)
$3 30,000 0
$6 26,000 4000
$9 22,000 9000
$12 18,000 12,000
$15 15,000 15,000
$18 12,000 22,000
$21 8000 28,000
$24 4000 36,000

The table above contains information about the corn market. Use the table to answer the following questions.

a. What are the equilibrium price and quantity of corn?

b. Suppose the prevailing price is $9 per bushel. Is there a shortage or a surplus in the market?

c. What is the quantity of the shortage or surplus?

d. How many bushels will be sold if the market price is $9 per bushel?

e. If the market price is $9 per bushel, what must happen to restore equilibrium in the market?

f. At what price will suppliers be able to sell 22,000 bushels of corn?

g. Suppose the market price is $21 per bushel. Is there a shortage or a surplus in the market?

h. What is the quantity of the shortage or surplus?

i. How many bushels will be sold if the market price is $21 per bushel?

j. If the market price is $21 per bushel, what must happen to restore equilibrium in the market?

For the last 70 years, the U.S. government has used price supports to provide income assistance to American farmers. At times the government has used price floors, which it maintains by buying up the surplus farm products. At other times, it has used target prices, a policy by which the government gives the farmer an amount equal to the difference between the market price and the target price for each unit sold. Consider the market for corn depicted in the accompanying figure.


Price of corn quantity of corn (bushels)
Per bushel           demand      supply
$5                           800         1200
4
3                            1000        1000
2
1                            1200         800
0

a. If the government sets a price floor of $5 per bushel, what does that mean and how will it affect supply and demand (illustrate on the supply and demand curve below)? How many bushels of corn are produced by the farmer? How many bushels of corn are purchased by consumers and at what price? How many bushels of corn are purchased by the government and at what price? How much does the program cost the government? How much revenue do corn farmers receive?





b. Suppose the government sets a target price of $5 per bushel for any quantity supplied up to 1,000 bushels What does that mean and how will it affect supply and demand (illustrate on the supply and demand curve below)? How many bushels of corn are purchased by consumers and at what price? How many bushels of corn are purchased by the government, if any? How much does the government pay the farmer and at what price? How much revenue do corn farmers receive?



c. Which of these programs (in parts a and b) costs corn consumers more? Explain.
Which program costs the government more? Explain. What are the inefficiencies that arise in each of these cases (parts a and)?

5. For the last 70 years the U.S. government has used price supports to provide income assistance to American farmers. At times the government has used price floors, which it maintains by buying up the surplus farm products. At other times, it has used target prices, a policy by which the government gives the farmer an amount equal to the difference between the market price and the target price for each unit sold. Consider the market for corn depicted in the accompanying figure.


Price of corn quantity of corn (bushels) Per bushel demand supply
$5 800 1200
4
3 1000 1000
2
1 1200 800
0

a. If the government sets a price floor of $5 per bushel, what does that mean and how will it affect supply and demand (illustrate on the supply and demand curve below)? How many bushels of corn are produced by the farmer? How many bushels of corn are purchased by consumers and at what price? How many bushels of corn are purchased by the government and at what price? How much does the program cost the government? How much revenue do corn farmers receive? (10points)

b. Suppose the government sets a target price of $5 per bushel for any quantity supplied up to 1,000 bushels What does that mean and how will it affect supply and demand (illustrate on the supply and demand curve below)? How many bushels of corn are purchased by consumers and at what price? How many bushels of corn are purchased by the government, if any? How much does the government pay the farmer and at what price? How much revenue do corn farmers receive? (10 points)

c. Which of these programs (in parts a and b) costs corn consumers more? Explain.
Which program costs the government more? Explain. What are the inefficiencies that arise in each of these cases (parts a and b)? (20 points)


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