Question

Bob owns a roadside stand that sells rhubarb pie. Bob likes to experiment with various pricing strategies in order to determine the most efficient way to run his business. The table below depicts some recent price changes and responses by consumers. Graphically illustrate the appropriate demand and supply curves and where the shortages, surplus and market equilibrium price were found. Price Changes and Responses by Consumers Price Quantity Demanded Quantity Supplied $4.89 311 255 $4.29 388 214 $5.39 198 309 $5.19 268 300 $5.00 279 279

Answer 1

First, plot quantity demanded. This will be your demand curve. You do that like this: you see that at the price 4.89, quantity demanded was 311. Plot a point at the coordinates x:311, y:4.89. Same for other prices; plot the 4 other points (for example, the second has coordinates x:388, y:4.29). Now connect those points with a curve. This is your demand curve! Now plot quantity supplied the same way and draw the supply curve. 
Surplus is when quantity supplied is greater than quantity demanded. This happened at prices 5.39 and 5.19. Shortage is when quantity demanded is greater than quantity supplied, which happened at prices 4.29 and 4.89. Equilibrium is when both quantities are the same and the market clears; that happened at the price 5.00.