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Determining Supply and Demand – Example 1
The graph above is supposed to show the demand and supply of wool sweaters. At $2.00 per sweater,
producers will supply 10 sweater and consumers want to buy 50 sweaters. At $5.00 per sweater,
producers will supply 20 sweaters, and consumers want to buy 30 sweaters. At $10.00 per sweater,
producers will supply 25 sweaters, and consumers will want to buy 25 sweaters. At a price of $15.00
per sweater, producers will supply 30 sweaters, and consumers will want to buy 20 sweaters. At a
price of $20.00 per sweater, producers will supply 40 sweaters, and consumers will want to buy 15
sweaters. Plot this data on the graph above, labeling the x-axis and y-axis as well as the supply and
demand curves.
1. What is the equilibrium price for wool sweaters?
$10.00
2. What is the equilibrium quantity for wool sweaters?
25
3. How are you able to find the equilibrium price and quantity?
The intersection of the supply and demand curve.
4. What would happen if sweaters were currently selling at $5.00 per sweater. Is this a surplus or
a shortage? How will the economy help wool sweaters get back to equilibrium price and
quantity (i.e. how will the market force the price and quantity to adjust)?
Shortage. Seeing the fact that sweaters are selling out, producers will begin charging a higher
price for their sweaters, which in turn will lower the quantity of sweaters sold, until the
equilibrium price and quantity are met.
Determining Supply and Demand – Example 2
The graph above is supposed to show the demand and supply of books. At $1.00 per book, producers
will supply 5 books and consumers want to buy 20 books. At $3.00 per book, producers will supply 8
books, and consumers want to buy 15 books. At $5.00 per books, producers will supply 10 books, and
consumers will want to buy 10 books. At a price of $8.00 per book, producers will supply 15 books,
and consumers will want to buy 7 books. At a price of $10.00 per book, producers will supply 20
books, and consumers will want to buy 5 books. Plot this data on the graph above, labeling the x-axis
and y-axis as well as the supply and demand curves.
1. What is the equilibrium price for books?
$5.00
2. What is the equilibrium quantity for books?
10
3. How are you able to find the equilibrium price and quantity?
The cross between the supply and demand curve.
4. What would happen if sweaters were currently selling at $8.00 per book. Is this a surplus or a
shortage? How will the economy help books get back to equilibrium price and quantity (i.e.
how will the market force the price and quantity to adjust)?
Surplus. The extra quantity of books on the shelf will help lower the prices of the books, which
in turn lowers the quantity of books produced, until the equilibrium price and quantity are met.
Determining Supply and Demand – Example 3
The graph above is supposed to show the demand and supply of jeans. At $12.00 per pair, producers
will supply 5 pairs of jeans and consumers want to buy 50 pairs of jeans. At $15.00 per pair, producers
will supply 10 pairs of jeans, and consumers want to buy 40 pairs of jeans. At $30.00 per pair,
producers will supply 25 pairs of jeans, and consumers will want to buy 25 pairs of jeans. At a price of
$40.00 per pair, producers will supply 35 pairs of jeans, and consumers will want to buy 15 pairs of
jeans. At a price of $50.00 per pair, producers will supply 45 pairs of jeans, and consumers will want
to buy 5 pairs of jeans. Plot this data on the graph above, labeling the x-axis and y-axis as well as the
supply and demand curves.
1. What is the equilibrium price for jeans?
$30.00
2. What is the equilibrium quantity for jeans?
25 pairs of jeans
3. How are you able to find the equilibrium price and quantity?
Intersection of supply and demand curve.
4. What would happen if jeans were currently selling at $50.00 per pair. Is this a surplus or a
shortage? How will the economy help jeans get back to equilibrium price and quantity (i.e.
how will the market force the price and quantity to adjust)?
Surplus. When producers see the extra pairs of jeans on the shelf, they will lower their price,
causing the amount of jeans supplied to decrease, until the equilibrium price and quantity are
met.
Determining Supply and Demand – Example 4
The graph above is supposed to show the demand and supply of hamburgers. At $0.50 per burger,
producers will supply 2 burgers and consumers want to buy 25 burgers. At $1.00 per burger, producers
will supply 4 burgers, and consumers want to buy 15 burgers. At $2.00 per burger, producers will
supply 8 burgers, and consumers will want to buy 8 burgers. At a price of $4.00 per burger, producers
will supply 15 burgers, and consumers will want to buy 3 burgers. At a price of $5.00 per burger,
producers will supply 20 burgers, and consumers will want to buy 1 burger. Plot this data on the graph
above, labeling the x-axis and y-axis as well as the supply and demand curves.
1. What is the equilibrium price for hamburgers?
$2.00
2. What is the equilibrium quantity for hamburgers?
8 hamburgers
3. How are you able to find the equilibrium price and quantity?
Intersection of supply and demand curves
4. What would happen if sweaters were currently selling at $0.50 per hamburger. Is this a surplus
or a shortage? How will the economy help hamburgers get back to equilibrium price and
quantity (i.e. how will the market force the price and quantity to adjust)?
Shortage. When producers see that they have no extra hamburgers in inventory, they will begin
to raise their price, in turn decreasing the amount of hamburgers sold, until the equilibrium
price and quantity are met.
Determining Supply and Demand – Example 5
The graph above is supposed to show the demand and supply of peanut butter. At $2.00 per jar,
producers will supply 5 jars and consumers want to buy 10 jars. At $5.00 per jar, producers will
supply 6 jars, and consumers want to buy 9 jars. At $7.00 per jar, producers will supply 7 jars, and
consumers will want to buy 7 jars. At a price of $8.00 per jar, producers will supply 8 jars, and
consumers will want to buy 6 jars. At a price of $9.00 per jar, producers will supply 10 jars, and
consumers will want to buy 1 jar. Plot this data on the graph above, labeling the x-axis and y-axis as
well as the supply and demand curves.
1. What is the equilibrium price for peanut butter?
$7.00
2. What is the equilibrium quantity for peanut butter?
7 jars
3. How are you able to find the equilibrium price and quantity?
Intersection of supply and demand curves
4. What would happen if peanut butter was currently selling at $9.00 per jar. Is this a surplus or a
shortage? How will the economy help peanut butter get back to equilibrium price and quantity
(i.e. how will the market force the price and quantity to adjust)?
Surplus. When producers see that not all of the jars are being sold, they will decrease the price
of the peanut butter, therefore increasing the amount of jars sold, until the equilibrium price and
quantity are met.