This is the alternative data response question to question (1) and was quite unpopular with the candidates. The question required candidates to prepare a demand and supply schedule for a hypothetical market at various prices in the (a) part of the question, determine the equilibrium price and quantity in market and the excess demand or supply at a particular price in the (b) part and to prepare a new demand schedule in the (c) part of the question. Most of the candidates could prepare the demand and supply schedule for the market in the (a) part of the question but only few of them could interpret their answers when a new demand function was introduced in the (c) part of the question. Candidates marks were a little above average in this question.

The candidates were expected to provide the following answers to obtain the maximum marks.

(a)        Demand and supply schedule

When price = $2,        Qd = 30 – 2 = 28         Qs = 15 + 2(2)  =  19

When price = $4,        Qd = 30 – 4 = 26         Qs = 15 + 2(4)  =  23

When price = $7,        Qd = 30 – 7 = 23         Qs = 15 + 2(7)  =  29 

(b)(i)    In equilibrium, Qd = Qs
Therefore, 15 + 2p = 30 – p   
2p + p = 30 – 15
3p = 15
P = 5           
Equilibrium price is $5.00
Substituting for p = 5, we have
Qd = 30 – 5 = 25.
OR
Qs = 15 + 2(5)= 25

   (ii)     If price is fixed at $ 3
Qd = 30 – 3 = 27        
Qs = 15 + 2(3) = 21   
Excess demand is = 27 – 21 = 6       

(c)        If the demand function changes to Qd = 40 – p
(i)     When price = $2,        Qd = 40 – 2 = 38        

When price = $4,        Qd = 40 – 4 = 36        

When price = $7,        Qd = 40 – 7 = 33                                

 (ii)       It represents an increase in demand.             
(iii)      At the same prices, more quantities of apples are demanded.