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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

What is the relationship between quantity Demanded and quantity supplied at equilibrium? What is the relationship when there is a shortage? What is the relationship when them is a surplus?

To determine

Mention the relationship between quantity demanded and quantity supplied at equilibrium. Also tell the relationship when there is shortage and surplus.

Explanation

At equilibrium level, where demand curve and supply curve intersect, the quantity demanded becomes equals to quantity supplied. This is shown at point ‘E’ in the following diagram.

In the situation of shortage or excess demand, when prices are below equilibrium price level, P-1, the quantity demanded is more than the quantity supplied...

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