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l Accept any other reasonable answer that is explained, e.g. higher levels of
income leading to parents spending more money on toys such as LEGO
Friends.
Award 1 mark for correctly identifying a possible reason for the higher demand,
plus up to 2 further marks for the explanation using demand and supply theory.
3
10
S
8
Price of carrots
($ per kg)
D
2
O
10 20 30 40 50
Quantity of carrots per
month (000 kg)
a) The equilibrium price is $6 where demand and supply are both equal to
25000kg of carrots.
Award marks as follows (1 mark each):
l Demand curve that is accurately plotted and labelled
l Supply curve that is accurately plotted and labelled
l Correct label for x-axis, i.e. Quantity of carrots per month (000kg)
l Correct label for y-axis, i.e. Price of carrots ($ per kg)
l Clearly showing the equilibrium price at $6
l Clearly showing the equilibrium quantity traded at 25000kg
b) At $5 per kilo, the demand is 30000kg whilst the supply is only 20000kg.
Hence, the excess demand is 10000kg of carrots as can be seen on the graph.
c) At $8 per kilo, the demand is 15000kg whilst the supply is 35000kg. Hence,
the excess supply is 20000kg of carrots as can be seen on the graph.