In the above figure, a surplus exists in the gasoline market when the price is
A) $1/gallon.
B) $2/gallon.
C) $4/gallon.
D) below $2/gallon.

Question

Quizplus · Accepted Answer

At a price of $4/gallon, the quantity supplied by gasoline producers (Qs) is higher than the quantity demanded by consumers (Qd), resulting in a surplus. At prices below $4/gallon, the quantity demanded exceeds the quantity supplied, resulting in a shortage. Therefore, the correct choice is C, where a surplus is shown to exist.

In the Above Figure, a Surplus Exists in the Gasoline