Exhibit 4-3 If the price of the good described in Exhibit 4-3 is $1.60, then an economist would expect the

Question

Exhibit 4-3  If the price of the good described in Exhibit 4-3 is $1.60, then an economist would expect the

Quizplus · Accepted Answer

According to Exhibit 4-3, at a price of $1.60, the quantity supplied is 70 units and the quantity demanded is 60 units. This implies that there is a surplus of 10 units in the market which may lead sellers to decrease the price to clear the excess supply. However, it is unlikely that the price would decrease all the way to $1.40 since that is below both the average variable cost and the marginal cost of production, indicating that suppliers would not be willing to supply at such a low price. Therefore, an economist would expect the price to decrease to a level where the quantity demanded equals the quantity supplied, which is $1.50 in this case.

Exhibit 4-3 If the Price of the Good Described