Asked by Grace Gressly on May 10, 2024
Verified
Suppose the equilibrium price of good Y is $5 and the equilibrium quantity is 150 units.Supply in this market is upward sloping.If the price of good Y is $12:
A) the quantity demanded will be greater than 150 units.
B) the quantity supplied will be less than 150 units.
C) there will be an excess demand for good Y.
D) there will be an excess supply of good Y.
Excess Supply
A situation where the quantity of a good supplied is greater than the quantity demanded at the current price.
Good Y
A non-specific term used in economic models to represent a product or service, usually contrasted with another good, referred to as "Good X."
- Acquire knowledge about the interrelation between shifts in price and the amount of products demanded or supplied.
Verified Answer
LS
Lindsay StoopsMay 15, 2024
Final Answer :
D
Explanation :
Since the equilibrium price of good Y is $5 and the current market price is $12, it is above the equilibrium price. Hence, the quantity supplied will exceed the quantity demanded, leading to an excess supply of good Y. Therefore, option D is the correct answer. Options A, B, and C are incorrect as they imply a shortage of good Y, which is not the case when the price is above equilibrium.
Learning Objectives
- Acquire knowledge about the interrelation between shifts in price and the amount of products demanded or supplied.