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Consider the following supply and demand model of the world sugar market (in billions of pounds):
Price per pound
Quantity Supplied
Quantity Demanded
$0.68
1,850
300
$0.67
1,500
525
$0.66
1,000
600
$0.65
700
$0.64
900
$0.63
550
1,200
a. Is there a shortage or a surplus when the price is $0.67? What about $0.63?
b. What are the equilibrium price and the equilibrium quantity?
c. Graph the supply curve and the demand curve.
d. Show the equilibrium price and quantity on the graph.
e. If there is a shortage or surplus at a price of $0.68 calculate its size in billions of pounds and show it on the graph.
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