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ScanSolve AI Answer
Step 1: Complete the demand schedule and supply schedule. The supply schedule is given as: |c|c|c| Price (\) & Quantity demanded (units) & Quantity supplied (units) \\ 1 & 20 & 0 \\ 2 & 18 & 2 \\ 3 & 16 & 4 \\ 4 & 14 & 6 \\ 5 & 12 & 8 \\ 6 & 10 & 10 \\ 7 & 8 & 12 \\ 8 & 6 & 14 \\ 9 & 4 & 16 \\ 10 & 2 & 18 \\ Step 2: Draw the demand and supply diagram. Plot price on vertical axis (\0 to \10), quantity on horizontal axis (0 to 20 units). Demand curve: downward sloping line joining (Q=20, P=1) to (Q=2, P=10). Supply curve: upward sloping line joining (Q=0, P=1) to (Q=18, P=10). Curves intersect at equilibrium point (Q=10 units, P=\6). Step 3: Identify surplus or shortage at given prices (Q2 table). For price = \2: Quantity demanded = 18 units Quantity supplied = 2 units Shortage = 18 - 2 = 16 units For price = \4: Quantity demanded = 14 units Quantity supplied = 6 units Shortage = 14 - 6 = 8 units For price = \5: Quantity demanded = 12 units Quantity supplied = 8 units Shortage = 12 - 8 = 4 units For price = \8: Quantity demanded = 6 units Quantity supplied = 14 units Surplus = 14 - 6 = 8 units |c|c|c|c| Price (\) & QD (units) & QS (units) & Surplus/Shortage (units) \\ 2 & 18 & 2 & Shortage 16 \\ 4 & 14 & 6 & Shortage 8 \\ 5 & 12 & 8 & Shortage 4 \\ 8 & 6 & 14 & Surplus 8 \\ Step 4: Find equilibrium price and quantity. From schedule, QD = QS at price = \6, quantity = 10 units. Algebraic verification: Demand: QD = 22 - 2P units Supply: QS = 2(P - 1) units Set QD = QS: 22 - 2P = 2(P - 1) 22 - 2P = 2P - 2 22 + 2 = 2P + 2P 24 = 4P P = 6 dollars Q = 2(6 - 1) = 10 units Equilibrium: price = \$6, quantity = 10 units.