AP Microeconomics 2.7: Disequilibrium and Market Changes

Explain how shortages, surpluses, and shifts in demand or supply move a competitive market toward a new equilibrium outcome.

Covered syllabus points

MKT-4.B—a. Define a surplus and shortage. b. Explain (using graphs where appropriate) how changes in underlying conditions and shocks to a…

[Maximum number: 1]

Sugar is produced in a perfectly competitive market using inputs from perfectly competitive factor markets. Frank Sugar Co. is a representative firm in the sugar market.

Assume the demand for sugar increases and sugar is produced in a constant-cost industry.

On your graph in part (a), show the short-run effect of the increased demand for sugar on the market price, labeled $\mathrm{P}_{2}$ , and the quantity sold by Frank Sugar Co., labeled $\mathrm{Q}_{\mathrm{N}}$ .

On your market graph from part (a), show a rightward shift in the market demand curve with a higher market price, labeled $\mathrm{P}_{2}$ , and show an upward shift in the firm's demand curve with a greater quantity sold by Frank Sugar Co., labeled $\mathrm{Q}_{\mathrm{N}}$ .

Figure for Answer to Question 2.7 Market Disequilibrium and Changes in Equilibrium question 1 — AP Microeconomics

All question bank results loaded

Covered syllabus points

2.7 Market Disequilibrium and Changes in Equilibrium question 1