Suppose the equilibrium price of good Y is $5 and the equilibrium quantity is 150 units. 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.

Question

Quizplus · Accepted Answer

At the new price of $12, the quantity supplied of good Y will increase as it has become more profitable for suppliers to produce and sell this good. However, the quantity demanded of good Y will decrease as the higher price makes it less attractive for consumers. This creates a surplus or excess supply of good Y as the quantity supplied will be greater than the quantity demanded.

Suppose the Equilibrium Price of Good Y Is $5 and the Equilibrium