Market Equilibrium Quick Check
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Question
In a given market, the market equilibrium price and quantity are $120 and 5 million units, respectively. At a price of $100, 4.8 million units are supplied, and 5.2 million units are demanded. It can be said that at a price level of $100 there is a _____.(1 point)
Responses
a surplus of 0.4 million units
a surplus of 0.4 million units
a surplus of 0.2 million units
a surplus of 0.2 million units
a shortage of 0.2 million units
a shortage of 0.2 million units
a shortage of 0.4 million units
a shortage of 0.4 million units
The supply and demand curves for a market are graphed below with price in dollars and quantity in thousands.
Two intersecting lines are graphed. The horizontal axis labeled Quantity goes from 0 to 70 in increments of 10. The vertical axis labeled Price goes from 0 to 50 in increments of 10. A line with a negative slope is labeled D and a line with a positive slope is labeled S. The lines intersect at approximately left parenthesis 33.7 comma 30 right parenthesis. A horizontal dashed line extends from left parenthesis 0 comma 30 right parenthesis to the point of intersection.
Which of the following would result from an increase (shift in the right) in the supply curve?
(1 point)
Responses
a market equilibrium quantity less than $30
a market equilibrium quantity less than 30 dollars
a market equilibrium quantity greater than $30
a market equilibrium quantity greater than 30 dollars
a market equilibrium price less than $30
a market equilibrium price less than 30 dollars
a market equilibrium price greater than $30
a market equilibrium quantity greater than $30
To determine whether there is a surplus or shortage at a price level of $100, we compare the quantity supplied and the quantity demanded at that price.
Given:
- Market equilibrium price: $120
- Market equilibrium quantity: 5 million units
- Price at hand: $100
- Quantity supplied at $100: 4.8 million units
- Quantity demanded at $100: 5.2 million units
To calculate the surplus or shortage, we subtract the quantity demanded from the quantity supplied:
4.8 million units (quantity supplied) - 5.2 million units (quantity demanded) = -0.4 million units
Since the result is a negative value, there is a shortage of 0.4 million units at a price level of $100.
Therefore, the correct answer is: a shortage of 0.4 million units.