"In the corn market, demand often exceeds supply and supply sometimes exceeds demand." "The price of corn rises and falls in response to changes in supply and demand." In which of these two statements are the terms "supply" and "demand" used correctly? ExplainIn the first statement, demand and supply should be replaced by quantity demanded(Qd) and quantity supplied(Qs). At the equilibrium of the corn market, Qd = Qs. At the price levels higher than the equilibrium price, Qs> Qd and at lower prices Qd> Qs. By the term demand and supply, the entire demand and supply curves are represented and at a particular price, the total demand curve cannot be above or greater than the supply curve. Qd or Qs may be greater than one another. In the second statement, the words are termed correctly. Changes in demand and supply reflect changes in Qd and Qs at every price level. This results in shifts of the demand and supply curves. For an increase in demand or supply, the curves shift rightwards, whereas for decrease, the curves shift to the left. After these shifts, the price level either increases or falls to bring the market into equilibrium.
In the first statement, the terms "supply" and "demand" are not used correctly. Instead, they should be replaced by "quantity demanded" (Qd) and "quantity supplied" (Qs). The reason for this is that demand and supply refer to the entire curves that show the relationship between price and quantity in the market. However, in the context of the statement, it is more appropriate to refer to the specific quantities demanded and supplied at a particular price level.
In the corn market, demand often exceeds supply when the quantity demanded (Qd) at a particular price level is greater than the quantity supplied (Qs) at that same price level. This situation occurs when there is more demand for corn than what is currently available in the market. Conversely, supply sometimes exceeds demand when the quantity supplied (Qs) at a particular price level exceeds the quantity demanded (Qd). This occurs when there is more corn available in the market than what consumers are demanding.
In the second statement, the terms "supply" and "demand" are used correctly. Changes in supply and demand refer to shifts in the entire demand and supply curves. When there is an increase in demand or supply, the curves shift to the right, indicating that at each price level, a greater quantity is demanded or supplied compared to before. On the other hand, when there is a decrease in demand or supply, the curves shift to the left, indicating that at each price level, a smaller quantity is demanded or supplied compared to before. These shifts in the curves lead to changes in the equilibrium price, as the market adjusts to bring the quantity demanded and supplied into balance.