The market for apples is represented by the following demand and supply functions: Qd = 30 - p; Qs = 15 + 2p. (a) Prepare a demand and supply schedule for t...

(a) Demand and supply schedule using \( Q_d = 30 - p \) and \( Q_s = 15 + 2p \).

(b)(i) Equilibrium. Equilibrium is where \( Q_d = Q_s \):

\[ 30 - p = 15 + 2p \Rightarrow 15 = 3p \Rightarrow p = 5 \]

Equilibrium quantity: \( Q = 30 - 5 = 25 \). So equilibrium price = \$5.00 and equilibrium quantity = 25 units.

(b)(ii) At a fixed price of \$3.00: \( Q_d = 30 - 3 = 27 \); \( Q_s = 15 + 2(3) = 21 \). Since quantity demanded exceeds quantity supplied, there is excess demand of \( 27 - 21 = 6 \) units (a shortage), which is expected because \$3.00 is below the equilibrium price.

(c)(i) New demand schedule with \( Q_d = 40 - p \):

(c)(ii) It represents an increase in demand.

(c)(iii) Explanation. At every price the quantity demanded is now higher than before (for example at \$2.00 it rises from 28 to 38). This means the whole demand curve has shifted to the right, which is the definition of an increase in demand. It is caused by a change in a non-price determinant such as a rise in consumers' income, a change in taste in favour of apples, or a rise in the price of a substitute.