The correct option is "shortage".
The image you've uploaded shows an economic graph that is used to illustrate the relationship between supply and demand. Let's go through the steps to analyze this graph and determine what economic condition it represents:
Step 1: Analyze the Graph
First, look at the supply curve (labeled 'S'), which is upward sloping, and the demand curve (labeled 'D'), which is downward sloping. These curves represent the relationship between the price of a good and the quantity supplied or demanded.
Step 2: Identify the Equilibrium Point
The equilibrium point is where the supply and demand curves intersect. This point determines the equilibrium price (P) and quantity (Q).
Step 3: Identify the Price and Quantity on the Graph
On the graph, there is a price level labeled P1, which is below the equilibrium price. At this price, the quantity demanded (at point Q2 on the demand curve) is greater than the quantity supplied (at point Q1 on the supply curve).
Step 4: Determine the Economic Condition
Given that at price P1, the quantity demanded exceeds the quantity supplied, there is a shortage of the good. A shortage occurs when demand outstrips supply at a given price, leading to upward pressure on prices.
Step 5: Choose the Correct Answer
Based on the analysis, the correct economic condition represented by the graph is a "shortage". The other options provided (black market, surplus, excess supply) do not correspond to the condition depicted in the graph:
- "Black market" is not a condition directly visible in a standard supply and demand graph.
- "Surplus" would occur if the quantity supplied were greater than the quantity demanded at a given price, which is not the case here.
- "Excess supply" is another term for surplus, which, again, is not what the graph shows.