QUESTION 3 Od Qd Price Qs Qs 50 40 10 70 80 60 50 9 60 70 80

QUESTION 3 Od Qd Price Qs Qs 50 40 $10 70 80 60 50 9 60 70 80 60 8 50 60 90 70 7 40 50 100 80 6 30 4 Refer to the above table. Suppose that demand is represented by columns (3) and (2) and supply is 0 the market would clear. O a surplus of 40 units would occur. 0 a shortage of 40 units would occur. O demand would change from columns (3) and (2) to columns(3) and (1) and (5). If the price were artificially set at $6,

Solution

Answer : Option c is correct.

Because according to the given table when the market price is $6 then the market demand is 80 and market supply is 40 units. Therefore, the market has

(80 - 40) = 40 units shortage in market supply.