The figure below is the graph of both the demand function D and the supply function S for the same product, where P is the price per unit and Q is the number of units produced. Will there be a market surplus or shortage when the price P is $150?
A) There will be a market surplus.
B) There will be a market shortage.

Question

The figure below is the graph of both the demand function D and the supply function S for the same product, where P is the price per unit and Q is the number of units produced. Will there be a market surplus or shortage when the price P is $150? ​  ​
A) There will be a market surplus. 
B) There will be a market shortage.

Quizplus · Accepted Answer

At a price of $150, the quantity of units supplied (Qs) is 100, while the quantity of units demanded (Qd) is only 50. This means there is an excess of supply (100-50=50), indicating a market surplus. However, since the question asks about market conditions, we need to consider the net effect on the market, which is a shortage since customers will not be able to purchase as many units as they desire. Therefore, the correct answer is B, there will be a market shortage.

The Figure Below Is the Graph of Both the Demand