**Question 16** **Table 4-7** | Price | Quantity Demanded | Quantity Supplied | |-------|-------------------|-------------------| | $10 | 10 | 60 | | $8 | 20 | 45 | | $6 | 30 | 30 | | $4 | 40 | 15 | | $2 | 50 | 0 | **Refer to Table 4-7. If the price were $4, a** - surplus of 15 units would exist, and price would tend to fall. - shortage of 25 units would exist, and price would tend to rise. - surplus of 25 units would exist, and price would tend to fall. - shortage of 40 units would exist, and price would tend to rise. **Explanation:** This table displays the relationship between price, quantity demanded, and quantity supplied. At various price points, the quantity demanded and supplied are listed: - At $10, there is a much higher supply (60 units) than demand (10 units), indicating a surplus. - At $8, supply (45 units) exceeds demand (20 units). - At $6, supply and demand are equal (30 units each); this represents equilibrium. - At $4, demand (40 units) exceeds supply (15 units), indicating a shortage. - At $2, demand is high (50 units) but supply is zero. The question asks what would happen if the price were $4. At this price, the quantity demanded (40 units) is greater than the quantity supplied (15 units), resulting in a shortage of 25 units. Therefore, the price would tend to rise to reach equilibrium.
**Question 16** **Table 4-7** | Price | Quantity Demanded | Quantity Supplied | |-------|-------------------|-------------------| | $10 | 10 | 60 | | $8 | 20 | 45 | | $6 | 30 | 30 | | $4 | 40 | 15 | | $2 | 50 | 0 | **Refer to Table 4-7. If the price were $4, a** - surplus of 15 units would exist, and price would tend to fall. - shortage of 25 units would exist, and price would tend to rise. - surplus of 25 units would exist, and price would tend to fall. - shortage of 40 units would exist, and price would tend to rise. **Explanation:** This table displays the relationship between price, quantity demanded, and quantity supplied. At various price points, the quantity demanded and supplied are listed: - At $10, there is a much higher supply (60 units) than demand (10 units), indicating a surplus. - At $8, supply (45 units) exceeds demand (20 units). - At $6, supply and demand are equal (30 units each); this represents equilibrium. - At $4, demand (40 units) exceeds supply (15 units), indicating a shortage. - At $2, demand is high (50 units) but supply is zero. The question asks what would happen if the price were $4. At this price, the quantity demanded (40 units) is greater than the quantity supplied (15 units), resulting in a shortage of 25 units. Therefore, the price would tend to rise to reach equilibrium.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:**Question 16**
**Table 4-7**
| Price | Quantity Demanded | Quantity Supplied |
|-------|-------------------|-------------------|
| $10 | 10 | 60 |
| $8 | 20 | 45 |
| $6 | 30 | 30 |
| $4 | 40 | 15 |
| $2 | 50 | 0 |
**Refer to Table 4-7. If the price were $4, a**
- surplus of 15 units would exist, and price would tend to fall.
- shortage of 25 units would exist, and price would tend to rise.
- surplus of 25 units would exist, and price would tend to fall.
- shortage of 40 units would exist, and price would tend to rise.
**Explanation:**
This table displays the relationship between price, quantity demanded, and quantity supplied. At various price points, the quantity demanded and supplied are listed:
- At $10, there is a much higher supply (60 units) than demand (10 units), indicating a surplus.
- At $8, supply (45 units) exceeds demand (20 units).
- At $6, supply and demand are equal (30 units each); this represents equilibrium.
- At $4, demand (40 units) exceeds supply (15 units), indicating a shortage.
- At $2, demand is high (50 units) but supply is zero.
The question asks what would happen if the price were $4. At this price, the quantity demanded (40 units) is greater than the quantity supplied (15 units), resulting in a shortage of 25 units. Therefore, the price would tend to rise to reach equilibrium.
Expert Solution
Step 1
equilibrium is achieved in the market where quantity supplied equals quantity demanded i.e. Qs=Qd
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