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Homework answers / question archive / 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 _____
| 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 50 units would exist and price would tend to fall
b. surplus of 10 units would exist and price would tend to fall
c. surplus of 25 units would exist and price would tend to fall
d. shortage of 25 units would exist and price would tend to rise
When the price is $8, the quantity demanded is 20 units and the quantity supplied is 45 units. Since the quantity demanded is less than the quantity supplied, the market is experiencing an excess supply or surplus.
Surplus=45−20
Surplus=25
The surplus is 25 units. It is a disequilibrium and the market will try to change prices to achieve equilibrium. At equilibrium, the price is $6. Therefore, the market will decrease its price from $8 to $6 to achieve equilibrium.
