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$6

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$6 = 20,000 Bushels

20,000 Bushels left

Difference between the quantity supplied and the quantity demanded

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30,000 20,000

10,000

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60,000

Demand is greater than quantity supplied

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$4

40,000

Equilibrium:

Qs = Qd

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Qd < Qs Surplus

Qd > Qs Shortage

Qd = Qs Equilibrium

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either supply or demand have to change

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  1. if demand increases more than supply, the equilibrium price goes up.
  2. if supply increases more than demand, the equilibrium price will go down

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$10

$8

Price Ceiling: legislated price that is below the equilibrium price

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$3

Price floor: price above the equilibrium price is called a price floor

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