Question

Refer to the above diagram of the market for corn. If the price in this market is $2 per bushel, then there will be? (The graph and answer choices are in the picture below)
a shortage of 8 thousand bushels.
a shortage of 4 thousand bushels.
a surplus of 12 thousand bushels.
a surplus of 8 thousand bushels.

Answer 1

Using the diagram of the market for corn. If the price in this market is $2 per bushel, then there will be option A: a shortage of 8 thousand bushels.

What is the issue of the quantity demanded about?

Based on the image attached,  12 thousand bushels are being wanted at this price of  $2 per bushel, while 4 thousand bushels are being delivered.

These figures are also shown in the image above. Now when you contrast the quantity given and sought at this pricing. The quantity supplied (12) lower than the quantity demanded (4). Or, to put it another way, the quantity that producers want to sell is lower than the quantity that customers want to purchase.

Therefore, Since Qd > Qs, we refer to this as an excess demand scenario or shortage.

Hence, 12 - 4 = 8

So there is a a shortage of 8 thousand bushels in quantity supplied.

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