Question

Graph the following Supply and Demand Schedule for Anabella’s Gourmet Slices of Pizza. Make sure to label everything. (See book for examples of what to label)

Price      QD          QS

$2.00     900         100

$3.00     850         200

$4.00     750         400

$5.00     500         500

$6.00     200         600

$7.00     100         750

What is the Equilibrium Price and Quantity?

At a price of $2.00, do you have a surplus or a shortage? How much?

At a price of $6.00, do you have a surplus or a shortage? How much?

Answer 1

1) Equilibrium Price = $ 5

Equilibrium Quantity = 500 units

2) At price of $ 2, Quantity demanded is greater than quantity supply so there is shortage of commodity.

Shortage = Quantity demanded - Quantity supplied = 900 - 100 = 800 units

3) At price of $6, quantity supplied is greater than quantity demanded so there is surplus in the market.

Surplus = Quantity supplied - Quantity demanded = 600 - 200 = 400 units