Question

At a price of $15, consumers demand 100 shirts and producers supply 50 shirts. So at this price, there is a(n) _____ .

Answer 1

A.) excess demand

The combination of supply and demand determines the selling price of goods and services in a market economy. The economy is said to be in equilibrium when supply equals demand, and the price charged is known as the equilibrium price. On the other hand, when demand exceeds supply, such as in this situation when buyers want to buy 100 units for $15 but sellers only want to sell 50, there is an excess of demand. Similarly, an oversupply arises when supply exceeds demand.