Excess supply or surplus $2.20 $1.80 An above-equilibrium price Equilibrium price A below-equilibrium price $1.40 $1.20 $1.00 Excess demand or shortage $0.60 300 400 500 600 700 800 900 Quantity of Gasoline (millions of gallons) Figure 3.4 Demand and Supply for Gasoline The demand curve (D) and the supply curve (S) intersect at the equilibrium point E, with a price of $1.40 and a quantity of 600. The equilibrium is the only price where quantity demanded is equal to quantity supplied. At a price above equilibrium like $1.80, quantity supplied exceeds the quantity demanded, so there is excess supply. At a price below equilibrium such as $1.20, quantity demanded exceeds quantity supplied, so there is excess demand. P ($ per gallon)

Excess supply or surplus $2.20 $1.80 An above-equilibrium price Equilibrium price A below-equilibrium price $1.40 $1.20 $1.00 Excess demand or shortage $0.60 300 400 500 600 700 800 900 Quantity of Gasoline (millions of gallons) Figure 3.4 Demand and Supply for Gasoline The demand curve (D) and the supply curve (S) intersect at the equilibrium point E, with a price of $1.40 and a quantity of 600. The equilibrium is the only price where quantity demanded is equal to quantity supplied. At a price above equilibrium like $1.80, quantity supplied exceeds the quantity demanded, so there is excess supply. At a price below equilibrium such as $1.20, quantity demanded exceeds quantity supplied, so there is excess demand. P ($ per gallon)

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter4: Demand, Supply, And Markets

Section: Chapter Questions

Problem 3.4P

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