Question

Assuming no government involvement in this market, if the current price were at the level of 0A, we would expect:

a) An excess demand for the product
b) An excess supply of the product
c) Equilibrium in the market
d) A shortage in the market

Answer 1

If the price is above the equilibrium level, we would predict an excess supply of the product. If the price is below the equilibrium level, we would predict a shortage in the market.

Step-by-step explanation:

If the price is above the equilibrium level, we would predict an excess supply of the product. This means that the quantity supplied would be greater than the quantity demanded at that price level. On the other hand, if the price is below the equilibrium level, we would predict a shortage in the market. This means that the quantity demanded would be greater than the quantity supplied at that price level.