Assessment Question Week 3: Markets in Action: Demand and Supply

Question 2
Suppose the graph below represents the demand and supply for rice at various prices, answer the questions that follow.
The graph above is represented in the table below. Please complete the table below identifying the shortage or surplus.
Price (10kg bag) Demand
(10 kg bags) Supply (SS)
(10 kg bags) Surplus (+)
Shortage (-)
10 89 29
20 70 40
30 55 55
40 39 67
50 25 80
60 11 95
1. Based on your findings in the table above, what is the market equilibrium price and quantity for rice? (3 marks)
2. Also, please examine the factors that can motivate the government to reduce the price of rice at $20 per 10 kg bag and the effects of that government legislation on the rice market. (7marks)

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