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The market for pizza has the following demand and supply schedules:a. Graph the demand and supply curves. What are the equilibrium price and quantity in this market?b. If the actual price in this market were $above$ the equilibrium price, what would drive the markettoward the equilibrium?c. If the actual price in this market were $below$ the equilibrium price, what would drive the market toward the equilibrium?
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Well, the question aid is asking us. Teo, draw the graph ofthe disappoint and the men curve. So this is a very standard question. So first of all, we have tio draw the the X axis on DH, labeled a cz quantity and why exes represents price. So we just write, draw each start according to this Al from from this table. So when the prices for the demand is like one hundred thirty five and then the supply is not like twenty six and then you draw the tart out of the car and we can observe that the equilibrium price it is six because that's the price where demand equals to supply. So the quantity that equilibrium quantity is eighty one. That's the question be is saying that What if the price is above the living Christ soc say the price now is eight. So if when the price is eight, we will have more supply, then demand right, because when the price is high, many people many firms want to produce this good, But consumers are not willing to buy. So what will happen is that now the firm well, citizen Oh, they were observed that okay, the price is too high. They have to move it down to attract more consumers to buy. And US Price indeed goes down. Consumers will think, Oh, it's getting cheaper, so I will break up by more. So that's how we were ended up in this equally grim Okay, so is that same case. If the actual price in this market is below the Caribbean price, what would drive the market where they deliver? So now, in the prices like to so say it's for So now, when the prices for those lots of consumers want to buy because the demand is one hundred and thirty five. But only a few producers are willing to produce because it is not profitable, put to produce things at such low price. What if the cost of producing is good? It's just for so they earn zero profit. So what is going to drive these? This different? This cap between consumers and the firm's slower is the market force, so we will know that they were moving in this direction because from the firm's point of view, it is not profitable to put to sell something that this low price so they were raised the price a little bit. And as the prices rising, consumers will find it the last attractive toe by this good. So they were reduced their demand and eventually they will reach this glaber and point.
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