Question

Choose the correct choice; At the current price level, producers supply $375 billion of final goods and services while consumers purchase $355 billion of final goods and services. The price level is: a. above equilibrium. b. at equilibrium. c. below equilibrium. d. More information is needed.

Answer 1

The price level is A) Above equilibrium.

Step-by-step explanation:

Normally, every economist believe that a lower price attracts a higher demand. This is so when the behaviour of consumers are measured when choosing a product. Many consumers go for a low priced product or cheaper product over a high priced product or expensive product irrespective of quality, taste or satisfaction derived from consuming them.

Price relating to market or in terms of quantity demanded and quantity supplied is referred to as equilibrium price or equilibrium quantity. When the market price is below equilibrium, quantity supplied of a product will be less than the quantity demanded for it because the price of goods are cheaper. But when price is above equilibrium, quantity supplied will be greater than quantity demanded because the price of goods is high.