ECON 201-Assignment #1 Name:, Student ID: TORTILLAS FOR SALE IN A COMPETITIVE MARKET: SUPPLY MEETS DEMAND Assume the market for tortillas is perfectly competitive and you observe the tortilla trade at your local market for one month. During this month, you record the information in the table below: 1. Fill in the missing entries in the "State of the market" and "Amount of shortage or surplus" columns (30 points) State of the market Quantity Quantity Price per tortilla package (shortage, surplus, or equilibrium) Amount of shortage or surplus demanded supplied Shortage $3.10 850 700 Shortage 75 $3.20 825 750 Equilibrium 0 $3.30 800 800 Surplus 75 $3.40 775 850 surplus 150 $3.50 750 900 $3.30 and the equilibrium 2. The market cauilibrium price of a package of tortillas is $ quantity is 800 packages of tortillas (10 points). 3. Imagine the price of a package of tortillas is $3.20. At this price, the quantity demanded would be 825 packages, but the quantity supplied would be 750 packages. This price would result in a (shortage / surplus) of 75 packages of tortillas. As a result, the market price will (rise/fall) over time. This change in price over time will cause quantity demanded to (increase / decrease) and quantity supplied to (increase / decrease) until quantity demanded is (greater than/less than / equal to) quantity supplied. This would occur at a price of $ $3.30 per package and a quantity of 800 packages (30 points). 4. Graph the supply and demand curves using your chart. Indicate the equilibrium price with "p and equilibrium quantity with "Q"". Graphically indicate the state of the market (surplus or shortage) if the price of a package of tortillas is $3.20 (30 points). Price $3.50 $3.40 $3.30 $3.20 $3.10 675 700 725 750 775 800 825 850 875 900 925 Quantity (packages) 150