Question

The demand schedule below shows how many candy bars Patrick will buy at different prices.

Price of candy bars	Quantity Demanded
$1.00	2
$0.80	3
$0.70	4
$0.60	5
$0.50	6

The Supply schedule below shows how many candy bars The Sweet Shop supply at different prices.

Price of Candy Bars	Quantity Supplied
$1.00	4
$0.80	3
$0.70	2
$0.60	1
$0.50	0

Combine Patrick’s demand schedule with The Sweet Shop’s supply schedule to create one schedule. Then create a graph showing the demand and supply curves for the schedule. Identify and label the supply and demand curves, the equilibrium price, where there is a surplus, and where there is a shortage.

Answer 1

Price of candy bars	Quantity Demanded	Quantity Supplied
$1.00	2	4
$0.80	3	3
$0.70	4	2
$0.60	5	1
$0.50	6	0

Price is taken on y-axis and demand is taken on x-axis.

Equilibrium price is the price where quantity supplied matches quantity demanded = $0.80.

At any price below $0.80, quantity supplied is less than the quantity demanded, hence we have a shortage. For example, at price = $0.60, quantity supplied (=1) is less than the quantity demanded (=5). Hence, there is a shortage of 4 units at price = $0.60

At At any price above $0.80, quantity supplied is more than the quantity demanded, hence we have a surplus. For example, at price = $1.00, quantity supplied (=4) is more than the quantity demanded (=2). Hence, there is a surplus of 2 units at price = $1.00.