Final answer:
At a price below equilibrium, the statement that there is excess demand equal to the distance DE is true, as this represents the shortfall between quantity demanded and the equilibrium quantity where supply equals demand.
Step-by-step explanation:
When analyzing market equilibrium and the relationship between supply and demand, it is important to understand the concepts of excess supply and excess demand. At a price level below equilibrium, there is an excess demand or a shortage, meaning that the quantity demanded by consumers is greater than the quantity supplied by producers as a result of the lower price.
Given this, if P3 represents a price below equilibrium, the true statement would be: at a price of P3, there is excess demand equal to the distance DE. This is because 'D' would likely represent the quantity demanded at price P3 and 'E' would represent the equilibrium quantity, where supply equals demand. Since at price P3 the quantity demanded is greater than the quantity at 'E', DE represents the shortfall or excess demand.