Question

Use the supply and demand schedule to answer the following questions. Quantity Demanded Quantity Supplied Surplus Price Shortage 10 2 4 2 0 1. Determine the surplus or shortage at cach price. 2. What is the equlibrium price? 3. What is the equilibrium quantity? 4. Plot and label the supply and demand curves on the graph below. 10 Quantity

Answer 1

Solution:

1)

Price	Quantity demanded	Quantity supplied	Shortage	Surplus
10	1	5	0	4
8	2	4	0	2
6	3	3	0	0
4	4	2	2	0
2	5	1	4	0
0	6	0	6	0

Working:

Price	Quantity demanded	Quantity supplied	Shortage	Surplus
10	1	5	0	5-1
8	2	4	0	4-2
6	3	3	0	0
4	4	2	4-2	0
2	5	1	5-1	0
0	6	0	6	0

2) Equilibrium price: $6

Working: At the equilibrium price $6; the quantity demanded equals quantity supplied.

3) Equilibrium quantity: 3

Working: At the equilibrium quantity 3; the quantity demanded equals quantity supplied

4)

10 Supply -Demand 0 2 5 6 Quantity