Complete the following table by indicating at each price whether there is a shortage or surplus in the market, the amount of that shortage or surplus, and whether this places upward or downward pressure on prices. Price (Dollars per jacket) 40 60 Shortage or Surplus Shortage or Surplus Amount (Jackets) Pressure
Complete the following table by indicating at each price whether there is a shortage or surplus in the market, the amount of that shortage or surplus, and whether this places upward or downward pressure on prices. Price (Dollars per jacket) 40 60 Shortage or Surplus Shortage or Surplus Amount (Jackets) Pressure
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter8: Understanding Markets And Industry Changes
Section: Chapter Questions
Problem 7MC
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Step 1
Equilibrium in the market occurs at the intersection of market demand and market supply curve.
If quantity demanded > quantity supplied, then there is a shortage in the market and it puts upward pressure on the market price.
Shortage = Quantity demanded - Quantity supplied.
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If quantity demanded < quantity supplied, then there is a surplus in the market and it puts downward pressure on the market price.
Surplus = Quantity supplied - Quantity demanded
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