Answer :
The new equilibrium price is $2.25 per kilo, and the new equilibrium quantity is 36 million kilos. (option b)
To find the new equilibrium price and quantity, we need to adjust the supply by subtracting 12 million kilos from the original quantities supplied at each price level. Let's calculate the adjusted supply:
Price per kilo Quantity Supplied (Adjusted)
1.75 16 - 12 = 4 million kilos
2.00 20 - 12 = 8 million kilos
2.25 24 - 12 = 12 million kilos
2.50 28 - 12 = 16 million kilos
2.75 32 - 12 = 20 million kilos
3.00 36 - 12 = 24 million kilos
Now, we can observe that at a price of $2.75 per kilo, the adjusted quantity supplied is 20 million kilos. The quantity demanded at this price remains the same, i.e., 32 million kilos. Therefore, the market is no longer in equilibrium.
To find the new equilibrium, we need to identify the price level where the adjusted quantity supplied equals the quantity demanded. From the table, we see that at a price of $2.25 per kilo, the adjusted quantity supplied is 12 million kilos, which matches the quantity demanded.
Therefore, the correct answer is B. $2.25 and 36 million kilos.
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Complete Question:
The following table shows the quantity demanded and quantity supplied of grapefruits (in millions of kilos): Finish attempt ... Time left 0:16:02 Refer to the table above to answer this question.
Price per kilo Quantity Demanded Quantity Supplied
1.75 40 16
2.00 38 20
2.25 36 24
2.50 34 28
2.75 32 32
3.00 30 36
If factor prices were to rise, causing the supply to change by 12 million kilos, what will be the new equilibrium price and quantity?
Select one:
A. $2.75 and 44 million kilos
B. $2.25 and 36 million kilos
C. $2.75 and 20 million kilos
D. $3.25 and 28 million kilos
