Question

question 3 The following table describes the market for waffles.

Price	Quantity Demanded	Quantity Supplied
$1	110	20
$2	90	60
$3	70	100
$4	50	140

Use the information in the table to find the equilibrium price and quantity in this market For price please enter your answer as a numerical response rounded to the nearest cent (ie. 5.00 or $5.50 not 5 or "Five dollars"). For quantity please enter your answer as a whole number (ie. 60 not 60.00 or "Sixty waffles").

What is the equilibrium price of waffles in this market?

What is the equilibrium quantity of waffles in this market?

What would happen in this market if government imposed the following price controls? Specifically, how many units of excess supply or excess demand will there be? Enter your answer by typing either "excess supply of" or "excess demand of" followed by a numerical amount (ie. "excess demand of 40" or "excess supply of 80"). Do not include the word "hamburgers" in your answer. If you think there will be no excess supply or excess demand simply type the word "zero" into the text box.

• Price Ceiling of $2
• Price Ceiling of $3
• Price Floor of $4

Answer 1

Equilibrium price and quantity are decided by the intersection of demand and supply curves. The equilibrium price is $2.50 and quantity is 80.

When price ceiling of $2 is imposed, then quantity demanded is 90 and quantity supplied is 60, so there is an excess demand of 90-60=30. Answer is excess demand of 30.

When price ceiling of $3 is imposed, then quantity supplied is 100 and quantity demanded is 70, so there is an excess supply  of 100-70=30. Answer is excess supply of 30.

When price ceiling of $4 is imposed, then quantity supplied is 140 and quantity demanded is 50, so there is an excess supply  of 140-50=90. Answer is excess supply of 90.