Attempts Keep the Highest36 Aa Aa 5 Market equilibrium and d

Attempts: Keep the Highest:/3.6 Aa Aa 5. Market equilibrium and disequilibrium The following calculator depicts the market for shirts. upward-sloping (orange) line represents supply. You can enter a price (in dollars) into the Price of a Shirt box to see the quantity demanded and quantity suppliled at thet price. Use the calculator to help you answer the following questions. You will not be graded on any changes you make to the calculetor Tool tip: Use your mouse to drag the green line on the graph. The values in the boxes on the right side callculator will change accordingly. You can also directly change t dlicking in the box and typing. When you click the Calculate button, the graph and any related values will change accordingly the values in the boxes with the white background by PRCE ?Slars per shirt 50 Price of a Shirt 15 Quantity Supplied 150 Quantity Demanded IShirts per month 300 Ishirts pe Shirts per month 30 10 0 100200 300 00 500 QUANTITY IShirts per menth per shirt, and the equlibrium quantity is shirts The equilibrium price of a shirt in this market is bought and sold per month. of Suppose the price of a shirt is $15. In this case, there would be shirts per month, which would exert pressure on prices. of Now, suppose that the price of a shirt is $24. In this case, there would be pressure on prices. shirts per month, which would exert

Solution

Correct Answer:

$20

200 shirts

(It is exhibited by the intersection point of demand and supply in the given graph)

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Shortage

300-150 = 150 shirts per month,

Upward

(Since the price is below the equilibrium, then demand will exceed the supply and shortage will be created. It will put upward pressure upon the price to achieve the equilibrium.)

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Surplus

240-100 = 140

Downward

(Since the price is above the equilibrium, then supply will exceed the demand and surplus will be created. It will put downward pressure upon the price to achieve the equilibrium.)