The figure given below shows the demand curves [D1 and D2] and the supply curve [S1] of capital. Figure 16.1
In Figure 16.1, if the price set in the market is P3 when the demand curve is D1, then:
A) the market will be in equilibrium.
B) there will be an excess demand for capital of the amount Q4 - Q1.
C) there will be a shortage of capital in the market by the amount Q4 - Q2.
D) there will be a surplus of capital in the market by the amount Q3 - Q1.
E) there will be a surplus of capital in the market by the amount Q3 - Q2.
Correct Answer:
Verified
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