Question

At any disequilibrium price the quantity actually exchanged is given by

a) the elasticity of supply.

b) the lesser of quantity demanded and quantity supplied.

c) the elasticity of demand.

d) the greater of quantity demanded and quantity supplied.

Answer 1

Ans) the correct option is b) the lesser of quantity demanded and quantity supplied.

Quantity exchanged is determined by the LESSER, between quantity demanded and quantity supplied.

Answer 2

The correct answer is (b) the lesser of quantity demanded and quantity supplied. At any disequilibrium price, the quantity demanded and the quantity supplied will not be equal, creating a shortage or surplus. The actual quantity exchanged will be determined by the lower of the two quantities: the quantity demanded by buyers or the quantity supplied by sellers. This is known as the principle of market clearance or the law of supply and demand. Elasticity of demand and elasticity of supply are factors that influence the responsiveness of quantity demanded or supplied to changes in price, but they do not determine the actual quantity exchanged.