suppose the accompanying graph depicts a market for one - pound bags of candy. place the line labeled excess…

suppose the accompanying graph depicts a market for one - pound bags of candy. place the line labeled excess demand at a price that would generate an excess demand, or shortage. then, determine the size of the excess demand. excess demand = 4 million bags market for candy

suppose the accompanying graph depicts a market for one - pound bags of candy. place the line labeled excess demand at a price that would generate an excess demand, or shortage. then, determine the size of the excess demand. excess demand = 4 million bags market for candy

Answer

Explanation:

Step1: Locate equilibrium price

Equilibrium at price $5 (D=S intersection).

Step2: Select price with excess demand

Choose price $3 (below equilibrium).

Step3: Determine Qd at $3

Qd = 7 million bags (demand curve value).

Step4: Determine Qs at $3

Qs = 3 million bags (supply curve value).

Step5: Compute excess demand

Excess demand = Qd - Qs = 7 - 3 = 4.

Answer:

4 million bags