In Problem 20, if a virus destroys potato crops and the quantity of potato chips produced decreases by 40 million bags a week at each price, how does the supply of chips change?

Problem 20

The demand and supply schedules for potato chips are

a. Draw a graph of the potato chip market and mark in the equilibrium price and quantity.
b. If the price is 60¢ a bag, is there a shortage or a surplus, and how does the price adjust?

Transcribed Image Text:

Price (cents per bag) 50 60 70 80 90 100 Quantity supplied (millions of bags per week) Quantity demanded 160 150 140 130 120 110 130 140 150 160 170 180