Question

(Most people agree that education is one of the crucial components that allow people to better themselves. A person misses out on many important opportunities if they are deprived of a complete education)

6.A market research team has come up with the demand and supply schedules for sandwiches in a city. These schedules are given in the table below.

Price (dollars per sandwiches)	Quantity demanded (thousand per week)	Quantity supplied (thousand per week)
8	2	10
7	3	9
6	4	8
5	5	7
4	6	6
3	7	5
2	8	4

i) Draw a figure showing the demand curve and the supply curve of sandwiches. What are the equilibrium price and quantity? If the market price is $6, is it a surplus or shortage? How large is it?

Answer 1

So from the above table, the graph will look like this.

The point where demand and supply both are equal is an equilibrium situation. Hence the point where the demand curve and supply curve intersect each other are equilibrium price and quantity. hence that is the market price and quantity.

So from the above graph equilibrium price is $4 and the equilibrium quantity is 6 units.

Now,

If the market price is $6 then the quantity demanded at $6 is 4 units and the quantity supplied at $6 is 8 units that means demand is less than supply. We can say that there is an extra quantity in the market than the demanded quantity by the people. Hence this is a situation of surplus or excess supply.

Excess Supply is by 4 units.