he graph below shows the market for potatoes in the country

he graph below shows the market for potatoes in the country of Ahura Mazda.

Solution

(a) In equilibrium, Demand = Supply

Equilibrium price = 3

Equilibrium quanitity = 10 million

(b) Buyers are paying (3 x 10 million) = 30 million

(c) When price = 4, demand = 8 million

Buyers will pay (4 x 8 million) = 32 million

(d) At price = 4, Supply = 14 million

Surplus = Supply - Demand = (14 - 8) = 6 million

Dollar amount of surplus = Price x Quantity of surplus = 4 x 6 = 24 million dollars

Government will buy this surplus amount from sellers.

Note: First 4 sub-parts are answered.