Question

Refer to the two tables below, which show, respectively, the willingness to pay and the willingness to accept of buyers and sellers of individual bags of oranges. For the following questions, assume that the equilibrium price and quantity depend on the following changes in supply and demand. Also assume that the only market participants are those listed by name in the two tables.

Answer 1

Based on the data given, the following is true:

• a. Equilibrium quantity = 6 bags of oranges.
• b. Quantity supplied = 0 bags of oranges.

Equilibrium Quantity when price is $8

The quantity being supplied at equilibrium depends on the number of producers who are willing to supply at the equilibrium price or lower.

All producers are willing to supply at $8 or lower in this scenario so the equilibrium quantity will be 6 bags.

Quantity supplied if it was public good

Buyers are not willing to pay any amount for public goods because they expect it to be free.

Private sellers will therefore refuse to supply any good because they will not be paid for it.

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