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Figure: Basic Supply and Demand
-(Figure: Basic Supply and Demand) In the diagram, if the market price is $2, then there is a:
A) surplus of 60 units.
B) surplus of 20 units.
C) shortage of 20 units.
D) market equilibrium.

Question

Use the following to answer questions:
Figure: Basic Supply and Demand 
-(Figure: Basic Supply and Demand) In the diagram, if the market price is $2, then there is a:
A) surplus of 60 units. 
B) surplus of 20 units. 
C) shortage of 20 units. 
D) market equilibrium.

Quizplus · Accepted Answer

At a price of $2, the quantity supplied is 40 units and the quantity demanded is 20 units. This creates a shortage of 20 units because there are not enough goods available at that price to meet the demand.

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