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Chapter 3: Q 16. (page 78)

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 there is a surplus?

Short Answer

Expert verified

In equilibrium, both demand and supply for a good are equal.

If there is a scarcity of a good, quantity demanded exceeds the quantity supplied.

If there is a surplus, quantity supplied exceeds the quantity demanded.

Step by step solution

01

Step 1. Define demand and supply.

Demand is an economic theory that refers to a consumer's desire to buy products and services as well as their readiness to pay a price for them.

The total amount of a certain commodity or service available to customers is described by supply, which is a fundamental economic notion.

02

Step 2. Relationship between quantity demanded and quantity supplied at equilibrium, when there is a shortage and when there is a surplus.

The total number of units acquired at a certain price is referred to as the quantity demanded. The entire number of units sold at a given price is referred to as quantity supplied. The quantity required and quantity supplied are equal in balance. In other words, in equilibrium, both demand and supply for a good are equal.

If there is a scarcity of a good, it signifies that the quantity demanded exceeds the quantity supplied, resulting in an excess demand.

If there is a surplus, it signifies that the quantity supplied exceeds the quantity demanded, resulting in an oversupply.

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Most popular questions from this chapter

Will demand curves have the same exact shape in all markets? If not, how will they differ?

What is the difference between the supply and the quantity supplied of a product, say milk? Explain in words and show the difference on a graph with the

supply curve for milk.

A tariff is a tax on imported goods. Suppose the U.S. government cuts the tariff on imported flat screen televisions. Using the four-step analysis, how do you think the tariff reduction will affect the equilibrium price and quantity of flat screen TVs?

What is the effect of a price ceiling on the quantity demanded of the product? What is the effect of a price ceiling on the quantity supplied? Why exactly does a price ceiling cause a shortage?

Will supply curves have the same shape in all

markets? If not, how will they differ?
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