Exhibit 3-2
-If price is below equilibrium,
A)demand is too low for equilibrium.
B)the income and substitution effects will cause the price to rise.
C)quantity supplied exceeds quantity demanded, and a shortage exists.
D)quantity demanded exceeds quantity supplied, and a shortage exists.
E)demand will increase.

Question

Exhibit 3-2 
-If price is below equilibrium,
A)demand is too low for equilibrium. 
B)the income and substitution effects will cause the price to rise. 
C)quantity supplied exceeds quantity demanded, and a shortage exists. 
D)quantity demanded exceeds quantity supplied, and a shortage exists. 
E)demand will increase.

Quizplus · Accepted Answer

When the price is below equilibrium, the quantity demanded exceeds the quantity supplied, leading to a shortage. This is because at lower prices, consumers are willing to buy more of the good than producers are willing to sell.

Exhibit 3-2 -If Price Is Below Equilibrium