Dominick Salvatore Schaums Outline of Microeconomics, 4th edition Schaums Outline Series 2006

CHAP. 8] PRICE AND OUTPUT UNDER PERFECT COMPETITION 197
(c)
QD 0 ¼ QS
10,000 5000P ¼ 50,000
50,000 ¼ 5000P
P 0 ¼ $10
(d ) QD 00 ¼ QS
60,000 5000P ¼ 50,000
10,000 ¼ 5000P
P 00 ¼ $2
(e)
Fig. 8-11
Note that, given the fixed quantity of the commodity supplied, market demand alone determines the
equilibrium market price of the commodity in the market period. Also, a vertical shift in the market
demand curve causes an identical change in the equilibrium market price of the commodity.
8.7 (a) To what length of time does the market period refer? (b) Explain briefly how the price mechanism
rations the existing market supply of a commodity, say, wheat, over the time of the market period. (c)On
what does the price of wheat depend over the time of the market period?