Exhibit above, which of the following would occur at a price of $2.00? a Inventories would put downward pressure on price b Quantity demanded exceeds quantity supplied, putting downward pressure on price c Inventories would put upward pressure on price d The surplus would be so small that there would be only slight downward pressure on price
Exhibit above, which of the following would occur at a price of $2.00? a Inventories would put downward pressure on price b Quantity demanded exceeds quantity supplied, putting downward pressure on price c Inventories would put upward pressure on price d The surplus would be so small that there would be only slight downward pressure on price
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
In Exhibit above, which of the following would occur at a price of $2.00?
| a |
Inventories would put downward pressure on price |
|
| b |
Quantity |
|
| c |
Inventories would put upward pressure on price |
|
| d |
The surplus would be so small that there would be only slight downward pressure on price |
Transcribed Image Text:**Price, Quantity Demanded, and Quantity Supplied Table**
This table illustrates the relationship between the price of a good, the quantity demanded by consumers, and the quantity supplied by producers. The data is organized as follows:
| Price | Quantity Demanded | Quantity Supplied |
|--------|-------------------|-------------------|
| $2.00 | 100 | 300 |
| $1.50 | 150 | 250 |
| $1.00 | 200 | 200 |
| $0.50 | 250 | 150 |
**Explanation:**
1. **Price**: The first column lists the price of the good, starting from $2.00 and decreasing to $0.50.
2. **Quantity Demanded**: This column shows how many units of the good consumers are willing to purchase at each price level. As the price decreases, the quantity demanded increases, which aligns with the law of demand.
3. **Quantity Supplied**: This column represents the number of units producers are willing to supply at each given price. As the price decreases, the quantity supplied decreases, illustrating the law of supply.
**Key Observations:**
- At the price of $1.00, the quantity demanded and the quantity supplied are equal at 200 units, indicating a market equilibrium.
- Higher prices lead to a higher quantity supplied but a lower quantity demanded.
- Conversely, lower prices result in a lower quantity supplied but a higher quantity demanded.
This table is a basic representation of how price impacts consumer demand and producer supply in a market.
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