Suppose the market for onions before the price spike has the consumers and producers listed in this spreadsheet. In equilibrium, how many onions are transacted? (Enter the whole number only, e.g. “9” or “99”)
The correct answer and explanation is:
To calculate the equilibrium quantity of onions transacted in the market before the price spike, we need to use the basic principles of supply and demand. At equilibrium, the quantity supplied equals the quantity demanded. This occurs at the price where the supply curve intersects the demand curve.
Steps to Determine the Equilibrium Quantity:
- Review the Spreadsheet:
The spreadsheet should contain data on the price of onions, the quantity demanded by consumers at each price point, and the quantity supplied by producers at each price point. These columns will allow us to determine the equilibrium price and quantity. - Find the Demand and Supply Curves:
The demand curve shows the quantity of onions that consumers are willing to buy at various prices. As the price decreases, consumers typically want to purchase more. On the other hand, the supply curve shows how many onions producers are willing to sell at various prices. As the price increases, producers generally supply more onions. - Determine the Equilibrium Price:
The equilibrium price is found by locating the price where the quantity demanded equals the quantity supplied. This is where the demand and supply curves intersect. - Identify the Equilibrium Quantity:
Once the equilibrium price is found, the corresponding quantity from either the demand or supply schedule will give the equilibrium quantity. Since at equilibrium, the quantity demanded equals the quantity supplied, it does not matter which curve is used. - Interpret the Result:
The number of onions transacted in equilibrium is the quantity at which both consumers and producers are satisfied. This number represents the volume of transactions that would occur in the market at that price.
Without the actual spreadsheet data, I can’t give you the specific number. However, this is the method you would use to determine the correct equilibrium quantity of onions transacted.