Question

the graph below shows the market for soya beans:
note: plot the two end points using the tool provided in the graphing area below. plot only the end points of the curve and position those points on the edge of the graphing area.

a. suppose that due to a bad harvest the supply of soya beans is reduced by 50 percent. (the quantities at every price are one - half of what they are at present.) draw the new supply curve in the graph above.
b. as a result of the drop in supply, what are the new equilibrium price and quantity?
new equilibrium price: $
new equilibrium quantity:

Explanation:

Step1: Identify original supply points

Original supply line goes from $(0, 0)$ to $(300, 6)$.

Step2: Calculate new supply quantities

At each price, quantity is $\frac{1}{2}$ of original. New points: $(0, 0)$ and $(150, 6)$.

Step3: Find original demand equation

Demand line connects $(0, 12)$ and $(300, 0)$. Slope $m=\frac{0-12}{300-0}=-0.04$. Equation: $P = 12 - 0.04Q$.

Step4: Find new supply equation

New supply line connects $(0, 0)$ and $(150, 6)$. Slope $m=\frac{6-0}{150-0}=0.04$. Equation: $P = 0.04Q$.

Step5: Solve for equilibrium

Set demand = supply:
$$12 - 0.04Q = 0.04Q$$
$$12 = 0.08Q$$
$$Q = \frac{12}{0.08} = 150$$
Substitute $Q=150$ into supply equation: $P = 0.04\times150 = 6$.

Answer:

New equilibrium price: $\$6$
New equilibrium quantity: 150 million kilos

(For part a, the new supply curve is drawn by plotting the points $(0, 0)$ and $(150, 6)$ and connecting them.)