Review Figure 3.4. Suppose the price of gasoline is $1.60 per gallon. Is the quantity demanded higher or lowerthan at the equilibrium price of $1.40 per gallon? What about the quantity supplied? Is there a shortage or a surplusin the market? If so, how much? SExcess supplyor surplus$2.20$1.80An above-equilibrium priceEquilibrium priceA below-equilibrium price$1.40a $1.20$1.00Excess demandor shortageD$0.60300 400 500 600700800900Quantity of Gasoline (millions of gallons)P ($ per gallon)

When there is an excess supply—that is, when the quantity supplied exceeds the quantity…

Answered: S Excess supply or surplus $2.20 $1.80…

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter7: Consumers, Producers, And The Efficiency Of Markets

Section: Chapter Questions

Problem 6CQQ

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Review Figure 3.4. Suppose the price of gasoline is $1.60 per gallon. Is the quantity demanded higher or lower
than at the equilibrium price of $1.40 per gallon? What about the quantity supplied? Is there a shortage or a surplus
in the market? If so, how much?

S
Excess supply
or surplus
$2.20
$1.80
An above-equilibrium price
Equilibrium price
A below-equilibrium price
$1.40
a $1.20
$1.00
Excess demand
or shortage
D
$0.60
300 400 500 600
700
800
900
Quantity of Gasoline (millions of gallons)
P ($ per gallon)

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