Worked example 1
Income rises for a normal good. Show the effect on equilibrium P and Q.
Show solution outline
Normal good → demand shifts right (at each price, Qd higher).
New equilibrium: higher P and higher Q.
Supply unchanged in short run.
2281 · 2.3
Demand — practice questions
Practice and worked examples for 2281 Demand. Short previews only — attempt the full question in MarkScheme against the official scheme.
Worked example 2
The table below shows the weekly demand and supply schedule for coffee pods in a local supermarket.
| Price ($) | Quantity Demanded (units) | Quantity Supplied (units) |
|---|---|---|
| 10 | 100 | 60 |
| --- | --- | --- |
| 12 | 90 | 70 |
| 14 | 80 | 80 |
| 16 | 70 | 90 |
| 18 | 60 | 100 |
(a) Identify the equilibrium price and quantity. (b) If the government sets a maximum price of $12, calculate the size of the resulting shortage.
Show solution outline
(a) Finding Equilibrium: Equilibrium occurs where quantity demanded equals quantity supplied (Qd = Qs).
- Step 1: Examine the schedule to find the price at which Qd and Qs are the same.
- Step 2: At a price of $14, the quantity demanded is 80 units and the quantity supplied is also 80 units.
- Answer: The equilibrium price is $14 and the equilibrium quantity is 80 units.
(b) Calculating the Shortage: A maximum price (price ceiling) of $12 is below the equilibrium price of $14.
- Step 1: Find the quantity demanded and quantity supplied at the new price of
- At $12, Quantity Demanded (Qd) = 90 units.
- At $12, Quantity Supplied (Qs) = 70 units.
- Step 2: Since Qd > Qs, there is a shortage.
- Step 3: Calculate the size of the shortage.
- Shortage = Quantity Demanded - Quantity Supplied
- Shortage = 90 - 70 = 20 units.
- Answer: The resulting shortage is 20 coffee pods.