Reference no: EM133067165

After Joslin had been running her business for several months, she began to feel confident of her success . She was making a profit. It was not as much as she had hoped for, but it was still a profit. One thing she had not decided was what price she should charge. She kept having sales an d specials that she hoped would hide the fact that she was having a hard time making up her mind. Finally she combined the in formation she had gathered in a demand-and-supply schedule and came up with an answer she hoped would work . Study her schedules below an d answer the questions that follow.

Price	Quantity of bags Joslin believes will be demanded	Quantity of bags Joslin is willing to supply	Difference between quantity demanded and quantity supplied
$10.50	800	1,600	800-bag surplus
$10.00	1,000	1,400	400-bag surplus
$9.50	1,200	1,200	equal
$9.00	1,400	800	600-bag shortage

Answer Choices:

a. $9.50 

b. reduce the shortage 

c. shortage 

d. surplus 

e. reduce the surplus

Questions:

1. What is Joslin's equilibrium price?

2. If Joslin charged $10.50 a bag, what problem would she have?

3. If Joslin charged $9.00 a bag, what problem would she have?

4. If Joslin charged $9, why would she probably decide to increase her price?

5. If Joslin charged $10 .50, why would she probably have to lower her price?