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Question
Microeconomics
Posted 7 months ago

The demand and supply schedules for lawn mowing are given below:
\begin{tabular}{lll} 
Price & Quantity demanded & Quantity Supplied \\
\hline$20\$ 20 & 0 & 12 \\
$18\$ 18 & 2 & 10 \\
$16\$ 16 & 2 & 8 \\
$14\$ 14 & 3 & 6 \\
$12\$ 12 & 4 & 4 \\
$10\$ 10 & 5 & 2 \\
$8\$ 8 & 6 & 0 \\
\hline
\end{tabular}

Which of the following would cause a surplus in this market?

Choose 1 answer:
(A) Any price below $12\$ 12
(B) A price of $12\$ 12
(c) Any price above $12\$ 12
(D) Any price below $20\$ 20
(E) If the good was free
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Answer from Sia
Posted 7 months ago
Sure, let's analyze the given data and determine which option would cause a surplus in the market for lawn mowing services.
Solution
a
Definition of Surplus: A surplus occurs when the quantity supplied exceeds the quantity demanded at a given price
b
Analysis of Data: From the table, we can see the following: - At 20,quantitydemanded=0,quantitysupplied=12−At20, quantity demanded = 0, quantity supplied = 12 - At 18, quantity demanded = 2, quantity supplied = 10 - At 16,quantitydemanded=2,quantitysupplied=8−At16, quantity demanded = 2, quantity supplied = 8 - At 14, quantity demanded = 3, quantity supplied = 6 - At 12,quantitydemanded=4,quantitysupplied=4−At12, quantity demanded = 4, quantity supplied = 4 - At 10, quantity demanded = 5, quantity supplied = 2 - At $8, quantity demanded = 6, quantity supplied = 0
c
Surplus Condition: A surplus occurs when the price is set above the equilibrium price, where quantity supplied is greater than quantity demanded. From the table, the equilibrium price is 12,wherequantitydemandedequalsquantitysupplied(4units).Anypriceabove12, where quantity demanded equals quantity supplied (4 units). Any price above 12 will result in a surplus
Answer
(C) Any price above $12
Key Concept
Surplus occurs when the quantity supplied exceeds the quantity demanded at a given price.
Explanation
In this market, any price above $12 will cause a surplus because the quantity supplied will be greater than the quantity demanded.

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