Question

18. Refer to the table given below. If the price is $3 per unit then (pick the best answer) 4 14 14 rice 12 16 uantity demanded 20 16 12 Quantity supplied the market is in equilibrium there will be excess supply equal to 4 units there will be excess demand equal to 4 units there will be a tendency for price to rise a) b) e) both c) and d) are correct 12

Answer 1

Answer = e) both c) and d) are correct

c) there will be excess demand equal to 4 units

Reason- at price =3, Quantity demanded =16 and quantity supplied= 12. Excess demand = 16-12=4

D) there will be a tendency for price to rise.

Reason- We can see equilibrium is at price= 4, where demand= supply=14, so price will rise from 3 to 4.

Also in case of excess demand, price have to rise to increase the supply.

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