Table 3-2

-In a free market economy,the market clearing (equilibrium)price in Table 3-2 would be

Question

Table 3-2
 
-In a free market economy,the market clearing (equilibrium)price in Table 3-2 would be

Quizplus · Accepted Answer

Looking at Table 3-2, we can see that at a price of $1, there is excess demand of 5 units (quantity demanded is 10, quantity supplied is 5). At a price of $3, the quantity supplied and quantity demanded are both equal at 8 units. However, at a price of $4 or $5, there is excess supply (quantity supplied is greater than quantity demanded). Therefore, the market clearing price (equilibrium) is $3, making option B the correct choice.

Table 3-2 -In a Free Market Economy,the Market Clearing (Equilibrium)price in Table