Question

Price Quantity Demanded Quantity Supplied

$10 10 60
$8 20 45
$6 30 30
$4 40 15
$2 50 0

If the price were $8, a

a. surplus of 25 units would exist and price would tend to fall.
b. surplus of 10 units would exist and price would tend to fall.
c. shortage of 25 units would exist and price would tend to rise.
d. surplus of 50 units would exist and price would tend to fall.

Answer 1

A

Step-by-step explanation:

Equilibrium price is $6. At this price quantity demanded equals quantity supplied. Above equilibrium price, there would be excess supply. Below equilibrium price, there would be excess demand.

$8 is above equilibrium price, so there would be a surplus.

the surplus : 45 - 20 = 25

As a result of the surplus, prices would fall until equilibrium is restored