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The graph provided shows a market for candy with supply (S) and demand (D) curves. The price per bag is shown on the vertical axis, and the quantity of bags (in millions) is on the horizontal axis.

To determine **Excess Demand**, we need to find the difference between the quantity demanded and the quantity supplied at the price level where excess demand occurs.

### Steps:

1. **Identify the Price Level**:
   - The price is set at $8 per bag, which is higher than the equilibrium price (where supply meets demand).

2. **Read Quantities from the Graph**:
   - **At $8**:
     - From the demand curve (D), the quantity demanded is 2 million bags.
     - From the supply curve (S), the quantity supplied is 7 million bags.

3. **Calculate Excess Demand**:
   - Excess demand occurs when the quantity demanded exceeds the quantity supplied.
   - In this case, since more bags are supplied than demanded, this leads to **excess supply** instead of excess demand. However, if we interpret the term "excess demand" more generally as the difference between supply and demand at $8, the difference is:

\[
\text{Excess Demand (shortage)} = 7 - 2 = 5 \text{ million bags}
\]

Therefore, the excess demand (shortage) is **5 million bags**.

Would you like any further clarifications or a detailed breakdown?

### 5 Follow-up Questions:
1. What is the significance of the equilibrium price in the context of supply and demand?
2. How do shifts in supply and demand curves affect excess demand or supply?
3. What are the economic consequences of persistent excess demand in a market?
4. How can the government intervene to correct markets with chronic excess demand?
5. Can excess demand occur at prices below the equilibrium price?

**Tip:** Always ensure to check the intersection point of supply and demand curves to determine equilibrium.

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.

Learn how to determine the excess demand (shortage) in a market for one pound bags of candy using a supply and demand graph. This problem covers key economic concepts such as market equilibrium and the law of supply and demand. Suitable for students in Grades 9-12.

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